OVERVIEW – OPEC to start talks on August oil cuts, meeting past quotas

MOSCOW (UrduPoint News / Sputnik – July 1, 2021) The OPEC Conference meeting and the OPEC and non-OPEC ministerial meeting are expected to meet on Thursday in online format to determine the volume of oil cuts in August and discuss levels of compliance with oil production quotas in May.

The 181st meeting of the OPEC Conference will begin at 11:00 GMT, and the 18th OPEC and Non-OPEC Ministerial Meeting will meet later the same day at 14:00 GMT via videoconference.

For the month of May, compliance with production adjustments within the Organization of the Petroleum Exporting Countries (OPEC) and its petroleum-producing allies, known as OPEC +, was estimated at 114% by the International Agency for l. energy (AIE). In April, the levels also reached 114%, said the alliance of oil producers, showing a trend of strong compliance with quotas by participating countries.

As for negotiations on production cuts for August, many expect a gradual increase in quotas. According to the IEA, OPEC + will have to “turn on the taps” to keep the world oil markets properly supplied in a context of growing demand. If momentum continues, global oil demand is expected to rebound by 5.

4 million barrels per day (mbd) in 2021 and will reach 100.6 mbd by the end of 2022, exceeding pre-COVID-19 levels, the IEA said.

Global oil supply is also expected to grow at a faster rate in 2022, with the United States driving gains of 1.6 mbd from non-OPEC + suppliers, the IEA noted. This would leave the possibility for OPEC + countries to increase crude oil production by 1.4 mbd above their target from July 2021 to March 2022, the agency added.

Under these circumstances, Kazakhstan will most likely push for a gradual increase in crude oil production under the OPEC + agreement, following the statement by Kazakh Energy Minister Nurlan Nogaev. He pointed out that with the global vaccination allowing businesses to reopen, economic activity began to grow, stimulating demand.

In May-July 2020, OPEC + implemented the historic reduction in oil production of 9.7 mbd due to the unprecedented drop in oil demand caused by pandemic shutdowns. As the situation stabilized, quotas were adjusted to 6.55 mbd in May 2021, 6.2 mbd in June and 5.76 mbd in July.