David Pisarra

Opec Agreement On Oil Production

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Opec Agreement On Oil Production

On April 11, 2021, Posted by , With No Comments

The latest news about the effectiveness of coronavirus vaccines, which have pushed oil prices to their highest level since their fall in April, may have made it more difficult to reach an agreement. In response to these higher prices, some oil producers saw less need to maintain supply and wanted to increase pumps to try to improve nearly a year with gloomy oil yields. But the talks have highlighted pressure within the OPEC Plus group, which has been trying to manage the oil market since 2016. These tensions are likely to make it more difficult for producers to keep pace with production targets as the global economy recovers in the coming months. OPEC and other Russian-led oil nations, trying to measure the strength of the global economy as coronavirus continues to rage but with vaccines on the horizon, reached a compromise on Thursday to moderately increase production in January. The agreement is massive and represents the largest drop in production in OPEC history. The reduction is more than twice as large as the 4.2 million barrels per day that the oil cartel made through a series of budget cuts during the 2008 financial crisis. However, analysts say this is likely to be overshadowed by the magnitude of the loss of demand in the grip of the pandemic. What is striking is that the United Arab Emirates, long Saudi Arabia`s closest ally, the de facto head of OPEC, has proved difficult to politicize. Analysts say the UAE`s ambitious leaders are irritated on several issues, including a tight quota that sharply criticizes their plans for a significant increase in oil production and Saudi-Russian supremacy in oil decision-making in recent years.

Iraq produced in May 520,000 bpd above its quota, while Nigeria`s overproduction was 120,000 bpd, Angola 130,000 bpd, Kazakhstan 180,000 bpd and Russia 100,000 bpd, showed OPEC data. Prince Abdulaziz also pointed out that some OPEC member states, which failed to fully comply with their individual production cuts in May and June, will reduce their crude oil production in July, August and September. At the 9th (extraordinary) ministerial meeting of OPEC and non-OPEC on 9 and 10 April, the important and responsible decision to adapt production was underlined. As global oil consumption increases and the global oil market moves closer to equilibrium, the 23-member group agreed to reduce its current production by 2 million bpd as of August 1. The group, known as OPEC, also called for countries such as Nigeria and Iraq, which exceeded production quotas in May and June, to be offset by further reductions from July to September. The agreement marks a compromise after sharp differences earlier this week among a group of producers who for months have been relatively concerted and have agreed to sharply cut production in order to stabilize oil markets. The coronavirus pandemic weighed on global demand at the beginning of the year, pushed up prices and weighed on the finances of major producers such as Saudi Arabia and Russia. The Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed on Wednesday to reduce their current crude production to 7.7 million barrels per day (bpd) from August, from the current bpd of 9.7 million bpd. The agreement was a compromise between countries that wanted to continue with a much larger increase of two million barrels per day, agreed at a previous meeting, and others, led by Saudi Arabia, who preferred to maintain the current production reductions, estimated at 7.7 million barrels per day, given the uncertainties associated with the pandemic.

“We are all equal. We have all reduced 23% of our production,” said Prince Abdulaziz. President Trump said Friday that the United States could cut oil production to “catch up with the slump” caused by Mexico`s lack of willingness to make deep cuts. It is not clear how such reductions would be made, as the White House does not dictate the production levels of comp

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