Will “OPEC +” decide to increase production?

 In comfortable financial conditions for oil prices and with the continued rise in oil prices and the increase in demand for it, the Organization of Petroleum Exporting Countries and non-OPEC + producing countries will meet (Thursday, July 1), to take a decision on increasing production or continuing to reduce it due to the economic repercussions of the Corona pandemic.

All expectations go to “OPEC +” adopting a decision to increase oil production by the producing countries, especially with the International Energy Agency’s call for the alliance to increase production because the demand for it is rising, and it is on its way to exceed its levels before the pandemic.

The "OPEC +" alliance, which includes 24 crude producers, including the 13 members of the Organization of Petroleum Exporting Countries, led by Saudi Arabia, and 11 non-OPEC producers led by Russia, can pump an additional 1.4 million barrels per day.

In the face of the rise in oil prices, Russia is considering submitting a proposal to increase the production of the "OPEC" alliance during the next meeting, especially as it sees that the market is witnessing a supply deficit with the increase in demand.

According to estimates by the American "Goldman Sachs", the market is witnessing a deficit of 3 million barrels per day due to the lack of significant growth in production from OPEC and suppliers of shale oil.

In the event that the “OPEC +” alliance decides to increase oil production, the Gulf countries will be the biggest beneficiary of the decision, as they are the highest source of black gold for the world.

And “OPEC +” decided, last April, to ease production restrictions by 350 thousand barrels per day, in May, then another 350 thousand barrels per day in June, and 400 thousand barrels per day in July.

Expected increase 

The economic researcher specializing in oil and energy affairs, Amer Al-Shobaki, expects that the “OPEC +” alliance will decide to increase oil production during their next meeting, up to half a million per day, but there are concerns that focus on the existence of a fragile recovery in global oil prices, due to the high number of people infected with mutated strains of Corona. .

Speaking to Al-Khaleej Online, Al-Shobaki said: "The improvement in the global economy is still fragile, from the point of view of the OPEC + energy ministers, in addition to the proximity of an agreement between the United States and Iran, which means that at any time Iranian oil is ready to enter the markets." .

These reasons, according to Al-Shobaki, will be on the table of the "OPEC +" alliance, to be discussed by the Study Committee and the Energy Ministers, to determine the amount of production that will be increased or reduced during the next stage.

Oil is currently, as Al-Shobaki explains, "the supply is less than what is required, there is a gap between supply and demand of about one million and 200 thousand barrels, so it is expected that there will be an increase in the production of the OPEC + alliance."

Saudi Arabia, according to Al-Shobaki, seeks to stabilize oil prices and the difference between supply and demand, and to absorb the large stocks that appeared in the markets in the last stage, during the Corona pandemic.

The economic researcher specializing in oil and energy affairs expects that "Russia will put pressure on its share in increasing oil production to be higher than that of other countries, in addition to that Saudi Arabia will continue to increase production while maintaining a balance."

Gulf readiness

In the Gulf, Kuwaiti Oil Minister Muhammad Al-Faris affirmed his country's support for the collective decisions issued by the alliance of the Organization of Petroleum Exporting Countries and non-OPEC + producing countries and its work in consensus and in a team spirit, to confront the challenges facing the oil markets.

In a statement issued by Al-Fares (Wednesday, June 30), he explained that "Kuwait's full commitment to play its entrusted role within OPEC +, by devoting efforts towards the stability of oil markets and the recovery of the global economy."

According to Al-Fares, the countries of the "OPEC +" alliance are cautious regarding the strategy of raising production amid the challenges of the oil markets.

In addition to Al-Shobaki’s assertions, and the Kuwaiti Oil Minister’s speech, the oil expert, Nimat Abu Al-Souf, confirmed that during the past week, oil prices rose for the fifth consecutive week, which is the longest period of gains since December, with shrinking inventories, and the market situation before the expected meeting of the “OPEC +” group. ".

During the “OPEC +” meeting, Abu Al-Souf expected, in an article published in the Saudi “Al-Eqtisadiah” newspaper, (Wednesday, June 30), that he would “consider pumping more crude oil, as global oil consumption is scheduled to return to pre-existing levels.” pandemic by the first quarter of 2022, driven by the strong expansion of economic activity, as well as the gradual reopening of major economies.

The recovery in fuel consumption in the main regions, including the United States and Europe, according to Abu Al-Souf, led to "the rapid depletion of stocks, with some signs that indicate that Brent crude prices may cross the $80 barrier soon."

The strong demand for oil, according to Abu Al-Souf, also caused "a rise in oil prices in all spot markets around the world. This is a clear indication that the actual oil markets are finally catching up with the recent rise in the futures markets."