OPEC+ likely to extend global oil output quotas: Reuters sources

ERBIL, Kurdistan Region — OPEC and its non-member allies are likely to further extend the current global oil output cuts into 2021, sources tell Reuters. 

Two virtual OPEC+ committees that can recommend policy steps will meet this week. The body will have a full meeting on November 30 and December 1 to decide on output policy for 2021.

“A three-month extension is highly likely,” an OPEC+ source told the news agency.

The organization was due to increase global oil output by 2 million barrels daily, 2 percent of global consumption, starting 2021. However, due to weakened demands for oil in the midst of the pandemic, there are talks of OPEC+ further extending its production cut policies for an extra 3-6 months.

OPEC and its allies, most notably Russia, agreed to cut global output of oil back in April in an attempt to boost oil prices during the global crisis caused by COVID-19.

Under the terms of the April agreement, OPEC+ pledged to cut output by 9.7 million barrels per day (bpd) from May 1 until the end of June.

The cuts were then to be gradually eased from July, to 7.7 million barrels per day (bpd) until December.

Countries like Iraq and Russia, who had previously overproduced are now making up for that excess by making extra cuts in their production.

Iraqi Oil Minister Ihsan Abdul-Jaber and Saudi Arabian energy minister Abdul-Aziz Bin Salman released a joint statement back in July after a phone call during which they discussed the urgency of Iraq adhering to the OPEC+ deal.

“Iraq will be fully committed to the OPEC+ agreement starting from August, and will compensate during the months of July, August and September for the overproduction during May and June,” the joint statement read.

In order to make up for the overproduction, Iraq had to cut an extra 400 thousand barrels per day, on top of the 850 thousand designated by OPEC+.

The Organization of the Petroleum Exporting Countries (OPEC) was founded by five states, Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, and has now grown to 13 members. The group controls more than half the world’s oil reserves and has a major influence on global oil prices.
OPEC+ is an alliance formed between members of OPEC along with non-member countries that export crude oil.