Opec-Plus Keeps All Options Open on Supply

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The Opec-plus producer alliance is keeping all options open heading into its latest monthly ministerial meeting on Sep. 5, delegates tell Energy Intelligence.

The alliance is on track to complete the gradual reversal of the big production cuts it made in early 2020 by the end of August and has already agreed to a token increase of 100,000 barrels per day in September.

Leading members Saudi Arabia and Russia — and various other members — have emphasized the importance of continuing cooperation on supply management within Opec-plus, but further details of alliance policy in the coming months are unclear.

Saudi Energy Minister Prince Abdulaziz bin Salman recently decried excessive price volatility in the "paper" oil market and said that Opec-plus was willing to take measures to stabilize the market — including production cuts — if they were needed.

The minister did not mention whether the option of cutting production would be discussed at the upcoming meeting.

Two Opec-plus delegates said it is still too early to say what the alliance may decide next week, with one of them suggesting that holding the previously agreed September production quotas steady into October might be an option.

UAE-based bank Emirates NBD said in a note that Opec-plus may not announce a production cut next week, but may opt to "roll back the planned production increase for September or keep target levels unchanged for October onward."

Energy Intelligence understands that the recent remarks by Prince Abdulaziz were not intended to defend a particular price range, but were aimed instead at stabilizing a market that in his view had become too sensitive to bearish or bullish signals.

"I recognize the need for legitimate risk-management in modern energy trading and the useful role derivatives markets play in enabling participants to manage risks," Prince Abdulaziz told the Opec-plus ministerial monitoring committee last month.

"But destabilizing speculation and manipulation have no place in a responsible and efficient market," he added.

Meanwhile, political unrest flared up this week in Iraq — Opec's second-largest oil producer — creating additional uncertainty at a time when the market is already concerned about tight supplies and the low level of spare production capacity.

Followers of Shiite cleric Moqtada al-Sadr have been protesting in Baghdad and oil-rich southern Iraq, but there is no indication so far that oil production and exports have been affected. In July Iraq produced around 4.4 million b/d.

Separately, Energy Intelligence understands that state-controlled Saudi Aramco has yet to finalize official October selling prices for its oil, which are expected to be released on Sep. 5 — the same day as the Opec-plus meeting.

There has been media speculation that Aramco might offer steep discounts to Asian buyers.

Opec-Plus Supply , Crude Oil, Oil Supply, Opec/Opec-Plus
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