The Organisation of the Petroleum Exporting Countries (OPEC) and its allies known as OPEC+, on Sunday agreed to increase the daily production output by additional 400,000 barrels per day (kpbd), to restore output cut at the start of Covid-19.
The upward adjustment will become effective in August, until the phasing out of the 5.8 mb/d production adjustment, and in December 2021 assess market developments and Participating Countries’ performance.
This followed a decision taken at the end of the 19th OPEC and non-OPEC Ministerial Meeting, after participants reviewed the current oil market fundamentals and the consensus on its outlook, according to a statement on the OPEC website.
“The Meeting noted the ongoing strengthening of market fundamentals, with oil demand showing clear signs of improvement and OECD stocks falling, as the economic recovery continued in most parts of the world with the help of accelerating vaccination programmes,” the statement reads.
Furthermore, the participating countries reaffirmed the framework of the Declaration of Cooperation (DoC) signed on December 10, 2016, even as overall conformity to the production adjustments was 113% in June (including Mexico).
Following the review of the current oil market fundamentals, participants also agreed, among others, to extend the decision of the 10th OPEC and non-OPEC Ministerial Meeting (April 2020) until the 31st of December 2022.
Continue to adhere to the mechanism to hold monthly OPEC and non-OPEC Ministerial Meetings for the entire duration of the Declaration of Cooperation, to assess market conditions and decide on production level adjustments for the following month, adding that it would endeavour to end production adjustments by the end of September 2022, subject to market conditions.
And to adjust, effective 1st of May 2022, the baseline for the calculations of the production adjustments
It reiterated the critical importance of adhering to full conformity and taking advantage of the extension of the compensation period until the end of September 2021. “Compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC Ministerial Meeting,” adding proposed the 20th OPEC and non-OPEC Ministerial meeting to be held in September. 1, 2021.
