Opec-Plus Approves October Output Increase

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Opec-plus ministers meeting on Wednesday swiftly approved a previously agreed increase in their oil production by 400,000 barrels per day in October, as had been widely expected. A statement released by the Opec secretariat said that "while the effects of the Covid-19 pandemic continue to cast some uncertainty, market fundamentals have strengthened and OECD stocks continue to fall as the recovery accelerates." Given the straightforward nature of the decision and the absence of any surprises, the ministers decided not to hold a press conference after their video conference meeting. "The meeting was so smooth, there was no need to change anything, and consensus was reached fast," said one Opec-plus delegate. The next Opec-plus ministerial meeting will be held on Oct. 4 and is expected to approve another increase in output of 400,000 b/d. The near-term market outlook appears to support the alliance's July decision to increase production by a total of 2 million b/d over the last five months of this year. But there are questions about the strength of global oil demand next year, when Opec-plus plans to continue to roll back its production cuts at a monthly pace of 400,000 b/d. Demand Outlook Revised A report reviewed by the alliance's Joint Technical Committee ahead of the ministerial meeting indicated that global oil markets would remain tight until the end of this year. But it also forecast that oil stocks would start to exceed their 2015-19 average in 2022, with the supply overhang growing steadily throughout that year (IOD Aug.31'21). The report's base-case scenario was built on the assumption that global oil demand would grow by 6 million b/d in 2021 and 3.3 million b/d in 2022. But delegates told Energy Intelligence that Opec's next Monthly Oil Market Report would raise the 2022 demand growth forecast to 4.2 million b/d, which could help to keep a lid on stocks. Iranian Minister Speaks Up During Wednesday's meeting, Iran's new Oil Minister Javad Owji echoed comments made by his predecessor that Tehran will move quickly to boost exports once US sanctions are lifted (IOD Aug.6'21). "As soon as the US government's unilateral illegal sanctions are lifted, Iran is ready to increase its oil production level to the highest possible level in order to compensate for the great losses caused by the US unilateral sanctions," he said. But delegates said there are currently no great concerns about Iran's possible return to the market, mainly because indirect talks between Iran and the US appear to be stalled (IOD Aug.25'21). No Requests for Baseline Revisions

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