Arab News, Monday, Aug 30, 2021 | Muharram 22, 1443
OPEC+ likely to stick to its output target despite Kuwait’s concerns
Kuwait:
OPEC+ and its allies are
likely to keep their plan to gradually restore the vast amount of crude
production halted during the pandemic and continue increasing production by
400,000 barrels per day every month for the remainder of the year even as
members such as Kuwait are raising concerns about the weakness of the market.
Plans for supply increases came into question, as
international crude prices sank about $11 a barrel roughly 15 percent, in the
first three weeks of August as China reimposed lockdowns.
The 400,000 bpd increase in oil output agreed by
OPEC+ nations in previous gatherings might be reconsidered at its next meeting
on Sept. 1, Reuters reported on Sunday, citing Kuwait’s oil minister.
“The markets are slowing. Since COVID-19 has begun
its fourth wave in some areas, we must be careful and reconsider this increase.
There may be a halt to the 400,000 (bpd) increase,” Mohammad Abdulatif Al-Fares
told Reuters at a government-sponsored event in Kuwait City.
He added that the economies of East Asian
countries and China remain affected by COVID-19 and caution must be exercised.
“There are meetings with OPEC countries, especially the Gulf Cooperation Council
countries, and so far there are different views on how to handle this issue,"
Fares said.
The alliance might not change course easily as
there are outages in North America affecting oil prices. Mexico has seen a halt
of more than 400,000 bpd due to an offshore oil rig accident, while producers in
the US are expecting decline in output due to a new storm hitting the US Gulf
coast.
Oil and natural gas explorers in the US Gulf of
Mexico and Louisiana refineries have begun shutting production ahead of
Hurricane Ida. About 1.65 million bpd, or 91 percent of crude production, and 85
percent of gas output was shut-in as of Saturday, while 1.9 million bpd of
refining capacity is shut, about 10 percent of the US total.
Ports from southern Louisiana to Mississippi were
closed on Sunday morning as Hurricane Ida raced toward the US Gulf Coast as an
extremely dangerous Category 4 storm. The Louisiana Offshore Oil Port, the
largest privately owned crude terminal in the US, had also halted deliveries
ahead of the storm, according to a notice on its website.
“The market east of Suez is weakening but it’s
hard to see this coming as many countries within OPEC+ already like the UAE want
to increase their output more, and there is pressure from consumers to bring
down prices,” Abdulsamad Alawadhi, a London-based independent analyst and former
Kuwaiti oil executive, told Arab News.
Analysts are already fixed on seeing OPEC+
maintains course, Bloomberg said on Friday based on a survey.
The US has urged OPEC and its allies to boost oil
output to tackle rising gasoline prices that it views as a threat to the global
economic recovery. Asked about the US call, Fares said OPEC+ members had
different views on the matter.
"I agree with the minister’s sentiment, but it
only reflects his position and I don't think it reflects that of the group," he
added.
The OPEC+ coalition’s careful stewardship of the
oil market has kept prices high enough to support the revival of the global
petroleum industry, and largely avoided the kind of spike that could threaten
the world’s economic recovery. They already restarted roughly 45 percent of the
unprecedented production volume shuttered last spring.