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OPEC+ to increase production in December

oil barrels

Reuters quotes sources from OPEC+ as saying that the organisation will proceed with some increases in the production of crude oil from December.

The news follows reports in the Financial Times that Saudi Arabia is ready to drop its unofficial $100 target for crude oil prices in favour of increasing production and regaining its market share.

Saudi Arabia and other countries implemented voluntary cuts beyond what they were obliged to under the OPEC+ agreement. Sources said that the production increases would be more about allowing these countries to wind down these voluntary cuts than regaining shares.

When these countries raise their output by a combined 180,000 barrels per day (bpd), OPEC+ believes this will be offset by cuts of 123,000 bpd by Kazakhstan and Iraq, which are being made to compensate for overproduction earlier in the year. One of the sources said about this:

“When the compensation plan and production figures from those countries becomes clear for September, then that will allow the increment to come in, as the impact of the increment will be negligible.”

Many oil producers are not bound by OPEC+ quotas. For example, ExxonMobil, the maker of the Mobil Pegasus gas engine oil, has been increasing its production in the US and Guyana, thus offsetting the 5.86 million bpd in total cuts by the OPEC+ countries. The organisation recently delayed its plans to wind down the voluntary cuts after the price of crude oil fell to its lowest level in nine months.

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