Key OPEC+ settle on a preliminary deal

Shafaq News/ Key producers of Opec+ countries have reached a preliminary deal on gradually raising oil output until December and extending their pact until the end of 2022; an OPEC+ source told Reuters on Sunday (July 18).

Opec+ ministers will meet online on Sunday in another attempt to agree on a quick oil supply boost to address soaring oil prices as the global economy recovers from the coronavirus pandemic.

The group, which includes Opec countries and allies like Russia, had earlier this month failed to resolve the disagreement over a new output policy between Saudi Arabia and the United Arab Emirates (UAE).

OPEC+ last year agreed on record output cuts of almost 10 million barrels per day (bpd) to cope with a pandemic-induced slump in demand and gradually relaxed them to about 5.8 million bpd.

The group had planned to ease the reduction by a further 2 million bpd from August until December 2021 because oil prices have climbed to 2½-year highs.

Whilst both Riyadh and the UAE had been supportive of an immediate output boost, the UAE had objected to the Saudi idea to extend the overall supply management pact to December 2022 from the current plan to end it in April 2022.

The UAE argued that it wants a higher output quota if the pact was to be extended.

A higher output quota for the UAE and potentially for other members like Iraq and Kuwait will be on the agenda on Sunday, according to sources from the inside of the organization.

Source: Reuters