OPEC+ Gets Scant Relief from Vaccine

OPEC+ Gets Scant Relief from Vaccine
Oil markets may be cheering the prospects of a coronavirus vaccine, but OPEC+ can't celebrate.

Libya, which is exempt from the agreement to restrain production, has revived output to the highest level in almost a year after a truce in its civil war. The North African nation tripled supply to 450,000 barrels a day last month, and is now pumping above 1 million a day.

The case for extending curbs, though persuasive, could still run into opposition.

The United Arab Emirates, which has recently chafed at its OPEC commitments, emphasized on Nov. 9 that consensus is necessary for the deal to be amended. “We have to be all convinced that tweak is required,” Energy Minister Suhail Al Mazrouei said.

One flash-point may be the millions of barrels of outstanding cuts still due from some members, which were supposed to be completed by the end of the year.

OPEC+ nations that flouted their output quotas in the initial months of the agreement, such as Iraq and Nigeria, have been tasked with “compensation cuts.” After making some tentative efforts at these, Baghdad defiantly ramped exports back up last month.

Iraq has often rebelled against OPEC-mandated supply limits as it rebuilds an oil industry and economy scarred by decades of conflict and sanctions.

As Baghdad’s finances come under acute distress, OPEC delegates doubt the country will make further efforts to atone. With Saudi Arabia’s steely energy minister determined that all remaining debts are paid, the group may face a bumpy path to a final agreement.

--With assistance from Olga Tanas, Dina Khrennikova, Manus Cranny and Yousef Gamal El-Din.

© 2020 Bloomberg L.P.


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