Opec+ agrees further oil output boost from October

Opec+ has agreed to further raise oil production from October as its leader Saudi Arabia pushes to regain market share, while slowing the pace of increases compared with previous months due to an anticipated weakening of global demand.

Opec+ has been increasing production since April after years of cuts to support the oil market, but the Sunday decision to further boost output came as a surprise amid a likely looming oil glut in the northern hemisphere winter months.

Eight members of Opec+ agreed on Sunday in an online meeting to raise production from October by 137,000 barrels per day, it said in a statement, much lower than the monthly increases of about 555,000 bpd for September and August and 411,000 bpd in July and June.

The Sunday deal also means Opec+ has begun to unwind a second tranche of cuts of about 1.65 million bpd by eight members more than a year ahead of schedule. The group has already fully unwound the first tranche of 2.5 million bpd since April, equivalent to about 2.4 per cent of global demand.

“The barrels may be small, but the message is big,” said Jorge Leon, analyst at Rystad and a former Opec official. “The increase is less about volumes and more about signalling - Opec+ is prioritising market share even if it risks softer prices.”

Opec+, made up of the organisation of the Petroleum Exporting Countries plus Russia and other allies, found it easy to raise production when demand was growing in summer, but the real test will come in the fourth quarter with expected slowing demand, Leon said.

Opec+ said it retained options to accelerate, pause or reverse hikes at future meetings. It scheduled the next meeting of the eight countries for Oct. 5.

Meanwhile, Russia is fully compliant with its OPEC+ commitments, Russian Deputy Prime Minister Alexander Novak said on Sunday. Eight Opec+ members agreed to raise oil production by 137,000 bpd in October, the group said in a statement.

The oil market is balanced, and the deal is being implemented on a very high level, Novak said, speaking on state TV after the group meeting.

“We agreed that we would monitor the market situation. We will have opportunities in the future, also meeting monthly, to make decisions in one or another direction depending on the state of the market”, he added.

“As far as Russia is concerned, we are fulfilling our obligations in full. Both in terms of compensation and in terms of increasing volumes that were agreed in previous periods.”

A day earlier, Iraqi Prime Minister Mohammed Shia Al-Sudani said that Iraqi oil will continue to feed global markets, for more than 120 years in the least estimates, although our export share is not commensurate with the size of the reserve, productive capacity and population.   Al-Sudani, quoted by Iraq News Agency, also stressed the Iraq openness to receiving oil companies wishing to invest in oil and gas. Hei pointed out to end of the burning of associated gas, and got the fully benefit of 1,300 million standard cubic feet.

“We had to work on multiple ways, in dealing with oil wealth, expansions in the capacities of current refineries, the opening of the giant Karbala refinery, and the operation and development of all refining units in the rest of the Iraqi refineries, as well as the announcement of (6) investment opportunities in the refineries sector, to strengthen the partnership with the private sector,” he added.

“We have a strategic goal to convert Iraq’s oil exports into high-value derivatives, instead of crude oil, by at least 40% of our total production, by 2030, and we have already started oil projects on this basis,” he said.

In August, Iraq announced that it will resume oil exports through Turkey’s Ceyhan Port within a day or two.

Iraqi Minister of Oil, Hayan Abdul-Ghani, speaking at a press conference in the northern city of Kirkuk, stated that production from the operational oil fields in Iraqi Kurdistan has reached 130,000 barrels per day, of which 50,000 barrels are used for local consumption.

He confirmed that an agreement had been reached with the Kurdistan Regional Government to take delivery of the remaining 80,000 barrels per day, which will be collected and exported via the Ceyhan Port in Turkey.

Separately, Iraq’s state oil company SOMO is in advanced talks with ExxonMobil over a possible agreement to secure storage capacity in Singapore using tanks owned by the US oil major, the Iraqi state news agency INA said on Saturday.

Agencies