OPEC+ Set to Remove All Production Curbs in August

OPEC+ is set to remove all production curbs in August, a new report from Fitch Solutions Country Risk and Industry Research sent to Rigzone this week has outlined.

In the report, Fitch Solutions noted that the move from OPEC+ to accelerate production cuts for July will be repeated in August, based on published guidance. This would remove all production curbs in August, one month earlier than initially outlined in the group’s strategy to return to full production, Fitch Solutions pointed out in the report.

“The increase in production targets above early guidance is a recognition from OPEC+ of a building market shortfall in supply that had previously not been acknowledged,” Fitch Solutions stated in the report.

“The accelerated tapering also signals a potential change in near-term OPEC production after August to help balance the markets as the group cites elevated oil prices as a rising risk to global economic stability along with other inflationary pressures,” Fitch Solutions added.

“The easing of lockdowns in China and ramp-up in summer driving in the northern hemisphere are key concerns that prices could rise higher than current levels in coming months without OPEC action,” Fitch Solutions continued.

Saudi Arabia, the UAE, Iraq, Kuwait and Algeria are the most likely candidates to take advantage of the early reduction in production cuts, according to the report, which added that Nigeria and Angola are unlikely to see any benefit from the accelerated tapering.

The OPEC+ group reconfirmed its decision to adjust its monthly overall production up by 0.432 million barrels per day for the month of July, OPEC revealed earlier this month. In addition, OPEC outlined that OPEC+ advanced its planned overall production adjustment for the month of September and redistributed the 0.432 million barrels per day equally over July and August. This will push July production up by 0.648 million barrels per day, OPEC highlighted.

According to a production table on OPEC’s website, Saudi Arabia and Russia have the joint top “required production” figure for July, coming in at 10.83 million barrels per day.

OPEC+’s next meeting is currently scheduled for June 30. Fitch Solutions noted that this meeting should reveal more about the group’s near-term strategy for increasing crude production and exports.

At its previous meeting on May 5, OPEC+ reconfirmed its decision to adjust its monthly overall production up by 0.432 million barrels per day for the month of June, OPEC revealed last month.

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