Oil buyers predicted a fight for every barrel

Duty OPEC+ summit promises to bring unpleasant surprises

On August 3, the next meeting of OPEC + will be held, at which the members of the alliance must routinely agree on the level of increase in their collective production – this time for September. However, there is also intrigue. Oil ministers may temporarily refuse to further increase production capacity, which is not yet capable of delivering ever-increasing volumes of quotas, which risks leading to an increase in the shortage of “black gold” in the world market.

The OPEC+ Technical Committee, which met on the eve of the ministerial summit of the alliance, did not consider the parameters of oil production, but only outlined the statistical data of the organization. It turned out that the members of the alliance were already lagging behind the declared production volumes: in June, the daily output of the fields of the exporting countries amounted to 39.722 million barrels, which is 2.839 million barrels lower than the level recorded in the protocols.

In addition, the experts of the OPEC + technical panel confirmed the forecast for oil demand growth in 2022 in the amount of 3.4 million barrels per day, specifying that in 2023 the planet’s daily demand for “black gold” could increase by another 2.7 million. barrels.”

It is worth noting that the current meeting of the alliance is the first meeting of oil ministers after the death of Mohammed Barkindo, who until recently held the position of Secretary General of OPEC, whose countries form the backbone of the expanded composition of the international producing organization. The cartel’s new general secretary, Haytham al-Ghais, who represents Kuwait, appears to favor Russia. According to him, our country is one of the largest producers of energy resources in the world and is very important for the entire organization, so producers of raw materials, primarily from the Persian Gulf states, will not compete with Moscow.

According to preliminary information, at the meeting on August 3, OPEC+ members will maintain and prolong the production regime established earlier for July and August, which implies a monthly increase in production from September to November by 648,000 barrels per day. “However, the usual resolution does not mean that the exporting countries will actually open their taps for the corresponding volumes,” said Igor Yushkov, an expert from the National Energy Security Fund and the Financial University under the Government of the Russian Federation. The Alliance does not hide the fact that it is unable to keep up with the growing production quotas. Of all the participants in the organization, only Kuwait, Algeria and the United Arab Emirates have the necessary resources for 100% compliance with the plan. Even Saudi Arabia, co-chairing OPEC+ with Russia, produced 114 thousand barrels per day less than the volumes set within the alliance.

Moreover, sources from a number of European and American publications report that during the negotiation process, OPEC + delegates may decide to reduce autumn production limits, as well as cancel decisions to increase production taken in July and August.

“Russia is not allowed to increase production by sanctions from the EU and the United States. Other members of the alliance are not able to comply with the announced agreements due to internal problems, as well as due to a significant lack of investment in new raw material projects,” Yushkov believes.

According to the expert, the combination of such circumstances risks leading to a further increase in the shortage of “black gold”, which is already faced by the world’s main energy consumers and an unpredictable rise in the cost of raw materials, as buyers actually win each other fight for each barrel.