Reuters is quoting a source as saying that OPEC and its partners are in discussions about a possible 500,000 bpd (barrels per day) production increase to compensate for declining oil supplies from Iran, as US sanctions begin to take effect.
OPEC and some non-member partners, most notably Russia, originally agreed in 2016 to cut production to clear a global supply glut that was depressing oil prices. Overall compliance was so high, however, that the cuts went much further than intended, pushing up oil prices despite rising US output from operators like ExxonMobil, which also makes synthetic greases like Mobilith SHC PM 460.
OPEC and its partners already agreed to return to 100% compliance, whereby countries with spare capacity, particularly Russia and Saudi Arabia, would compensate for those countries undershooting their quotas. A further half a million bpd would therefore take compliance below 100%.
An actual decision is not expected soon, however. Reuters quotes its source as saying:
“There are discussions to increase production by another 500,000 bpd. They (OPEC and non-OPEC) can increase output when they meet in December.”
The next formal OPEC meeting will be in December, and it is the only forum where a production increase can be agreed without calling an extraordinary meeting. What’s more, all participants need to approve any increase in theory, with Iran already saying it will seek to block any increases.
Nevertheless, Brent crude fell in price by more than a dollar on the back of the news.