BAKU, Azerbaijan, Jan.6
By Leman Zeynalova – Trend:
Key OPEC+ members will see baseline production levels increased in May 2022, adding to a potential surge in supply as producers seek to maximize output, Trend reports with reference to Fitch Solutions.
“As part of an amended agreement following protests from the UAE in July 2021, select OPEC+ members will see baseline levels of production increase. Depending on the method of accounting, this could see a sharp increase in output from the group as whole,” reads the latest report released by Fitch Solutions.
The company notes that global crude stocks remain well above pre-pandemic levels, but well below the peaks seen during the early stages of the pandemic in 2020.
“The reduction in crude in storage supports the market coming in balance but the current surplus indicates that potential stop gaps measure could limit price upside. These short-term measures include strategic petroleum releases which in the case of the US only provide short-term relief as by law the volumes must be replaced in the future which would add more price pressures. Oversupply remains the main concern, although emerging downside risks to output could lead to tightening fundamentals,” said the company.
Fitch Solutions believes that impacts to production in Libya could prove to be longer lasting than the company currently anticipates, amid delays to the country’s presidential elections.
“Militias have shut down production at the country’s largest field, Sharara, alongside several others, triggering a fall of above 300,000b/d in output. New reports of a damaged pipeline are expected to sap an additional 200,000b/d of supply. Should these disruptions be prolonged, or expand to other infrastructure, we could see more room for other OPEC barrels and support for a tighter market outlook,” said the company.
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