US Presses Opec-Plus for More Supply

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The White House is pushing Saudi Arabia, the United Arab Emirates and other countries in the Opec-plus coalition to increase output more rapidly amid concerns that tight oil supplies are hampering the economic recovery and contributing to inflation. The US has told major global oil producers that "the production cuts made during the pandemic should be reversed as the global economy recovers in order to lower prices for consumers," US President Joe Biden said Wednesday. Opec-plus output is 1 million barrels per day higher than it was in April, when the group tweaked its pandemic-related supply policy as demand recovered. Saudi Arabia itself has added 1.2 million b/d in production over the last three months, winding down a portion of its cuts that were designed to counter the collapse in demand caused by the Covid-19 pandemic in 2020 (OD Jul.19'21). Going forward, Opec-plus members are planning to collectively add about 400,000 b/d per month until September 2022 (OD Jul.19'21). That will move output about 3.3 million b/d higher by the end of 2021 than it was at the start of the year. 'Simply Not Enough' That’s not fast enough, US National Security Adviser Jake Sullivan said in a statement. "These increases will not fully offset previous production cuts that Opec-plus imposed during the pandemic until well into 2022," said Sullivan. "At a critical moment in the global recovery, this is simply not enough." National Security Council officials have spoken to representatives from Saudi Arabia, the UAE and other Opec-plus members over the last week, a White House official said, emphasizing the "responsibility of Opec-plus to do more to support the recovery." So far, Opec members have not collectively discussed output increases beyond the agreed 400,000 b/d monthly additions, an Opec source said Wednesday. Global consumption remains about 3 million b/d lower than in 2020, Energy Intelligence reckons, and Opec-plus is keeping crude oil production down to drain inventories that were built up during the Covid-19 demand collapse. Opec members are also grappling with the possibility that more barrels from Iran could enter the market if a deal is reached on the country’s nuclear program (OD Aug.3'21). The crude market is tight and the global benchmark Brent crude price has risen from $52 per barrel at the start of the year to $70/bbl on Wednesday, with US benchmark West Texas Intermediate at $67.50/bbl (related). Surplus inventories have been mostly worked off in OECD countries, where crude oil inventories are at 1.1 billion barrels, roughly the same as they were in 2019. Likewise, inventories of refined products are at 1.8 billion bbl, about where they stood two years earlier. The tight supplies could serve as an impetus to re-examine a long-proposed bill that would make Opec members subject to US antitrust laws, the director of the group Securing America's Future Energy said Wednesday (OD Apr.13'21). A White House spokesperson did not comment when asked for the administration's view on the legislation. Inflation Anxiety

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