Opec-Plus Seen Rubber-Stamping Output Increase

Opec-plus ministers meeting on Wednesday will likely rubber-stamp their previous decision to increase oil output in monthly increments of 400,000 barrels per day, delegates told Energy Intelligence. With Brent crude futures currently trading above $70 per barrel, prices are at an acceptable level for most member states. That should support the alliance's July decision to increase output by a total of 2 million barrels per day in the last five months of this year and phase out all of the remaining production cuts by September of next year (IOD Jul.19'21). The Opec-plus Joint Technical Committee (JTC) is due to meet on Tuesday, followed by meetings on Wednesday of the Joint Ministerial Monitoring Committee (JMMC) and all of the Opec-plus ministers. Oil prices have been supported recently by a fire that hit Mexican production and a hurricane that took most US Gulf of Mexico production off line at the weekend (OD Aug.23'21). On Monday Mexico's national oil company Pemex said it had restored all of the 420,000 b/d of oil production that was taken off line by the fire, but a US government agency said 1.7 million b/d of production was shut in after Hurricane Ida. Kuwaiti Oil Minister Mohammad Abdulatif al-Fares said on Sunday his country would support a "consensus" agreement based on the recommendations of the JTC and JMMC meetings. Half of Cuts Now Reversed Opec-plus started to implement an unprecedented 9.7 million b/d of production cuts in May 2020 to offset the collapse in oil demand caused by the Covid-19 pandemic. The cuts were scheduled to be pared back to around 5 million b/d by September of this year. Even though Opec-plus has set out a schedule for unwinding the remaining production cuts, its plans are subject to a monthly review process, and ministers have announced surprise decisions on several previous occasions. A new surprise cannot be ruled out this week either, given the uncertainty around demand as the world continues to struggle with the Delta variant of Covid-19. Energy Intelligence estimates that market fundamentals still leave room for Opec-plus to boost supply, especially during November and December, when there look to be supply deficits of 1.5 million b/d and 1.6 million b/d, respectively. Iran Plans Its Return