OPEC struggles to pump more oil to meet growing demand, Auto News, ET Auto

The inability of some members to increase production to agreed levels suggests that a supply gap could develop as the group proceeds with a monthly production increase plan to eliminate the remainder of record supply cuts made. in 2020.

OPEC and its allies once again struggled to pump enough oil in August to meet global demand as it recovers from the coronavirus pandemic, which could exacerbate upward pressure on oil prices. oil.

Several OPEC + members such as Nigeria, Angola and Kazakhstan have struggled in recent months to increase production due to years of underinvestment or significant maintenance work delayed by the COVID pandemic -19.

Cheating and producing above targets has traditionally been one of OPEC’s main problems, but the situation has changed in recent years as investment has poured into the renewable energy sector as part of the energy transition.

Despite the increase in renewables, the world is still consuming near-record amounts of crude, which will put additional pressure on Saudi Arabia and OPEC’s other major Gulf producers to pump more oil into the country. coming years.

On Tuesday, two OPEC + sources told Reuters that OPEC + compliance with oil production cuts rose to 116% in August. The figure, which excludes Mexico, compares to 109% in July, and comes as the group increased production by 400,000 barrels per day in August and September.

The inability of some members to increase production to agreed levels suggests that a supply gap could develop as the group proceeds with a monthly production increase plan to eliminate the remainder of record supply cuts made. in 2020.

This could increase the burden on major producers like Saudi Arabia if demand really begins to pick up and exceed pre-pandemic levels, which forecasters say could happen as early as the second quarter of the year. next.

Earlier this month, the Organization of the Petroleum Exporting Countries and its Russian-led allies, or OPEC + as the alliance is known, agreed to increase production targets by an additional 400,000 bpd in October.

The August production data shows that the main sub-producers were the African members of OPEC, Nigeria and Angola, and Kazakhstan, which is not a member of OPEC.

Underinvestment, lack of exploration and the exit of some oil majors have hampered Angola and Nigeria’s efforts to increase production, a problem that is expected to continue to affect West African producers for the near future.

Kazakh production was hampered mainly by field maintenance at its largest oil production field, Tengiz, which lasted from early August to mid-September.

The OPEC + Joint Technical Committee (JTC), which assesses market fundamentals, is due to meet on September 29 ahead of the October 4 ministers meeting, is expected to finalize compliance figures.

Iraqi OPEC oil minister Ihsan Abdul Jabar said on Sunday that OPEC + should stick to its current production agreement which he will meet soon “if prices remain stable”.

This effectively means moving forward with a further increase of 400,000 bpd for at least November.

This view was echoed by UAE Energy Minister Suhail al-Mazrouei, who told reporters on the sidelines of the Gastech conference in Dubai on Tuesday that he saw no need to change the current agreement.

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The Organization of the Petroleum Exporting Countries (OPEC) has lowered its forecast for global oil demand for the last quarter of 2021, citing the variant of the Delta coronavirus and saying a further recovery will be partially delayed until next year . The producer group said in a monthly report that it expects demand for oil to average 99.7 million barrels per day (bpd) in the fourth quarter of 2021, down 110,000 bpd from forecast last month.

Sylva said he did not expect the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC +, to take extraordinary action when they meet next month.


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Felix J. Dixon

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