The oil cartel Opec and its partner countries (Opec plus) have agreed on a significant increase in oil production in view of the global economic recovery. From August onwards, the Oil Alliance will increase its daily production by 400,000 barrels (159 liters each) a month until further notice, Opec announced on Sunday after an online ministerial meeting called at short notice. If market conditions permit, the existing production cut will expire in September 2022, it said.
The consequences of the decision for the consumers of heating oil and for the motorists are still difficult to foresee. Fuel is now as expensive as it was last in autumn 2018. Compared to summer 2020, which was shaped by the Corona crisis, fuel costs a good 20 percent more.
“We are dealing with uncertainties,” said the Saudi energy minister, Abdulasis bin Salman, with a view to the danger of new corona waves. He pointed out that the Oil Alliance would hold on to its monthly meetings to assess the market situation. The next meeting of the Oil Alliance is planned for September 1st.
The 23 states agreed on a new cut for the funding shares, which should come into effect from May 2022. Saudi Arabia, the United Arab Emirates, Kuwait and Iraq as well as Russia as the most important partner country benefit from this. A dispute between Saudi Arabia and the United Arab Emirates over production quotas prevented an agreement two weeks ago.
Russia’s Deputy Prime Minister Alexander Nowak told state television that the market demand for oil and petroleum products had increased and that there was now a deficit. With the OPEC decision, oil production will be brought back to the level before the corona pandemic. “For Russia this means, for example, that we will reach the pre-crisis level by next May.”
At the beginning of the corona pandemic, Allianz Opec plus cut daily production by around 9.7 million barrels in the previous year. This made it possible to support oil prices, which had fallen sharply due to the global economic downturn. In the meantime the oil faucet was gradually turned on. The production cut is now around 5.7 million barrels a day. Thanks in part to the production limit, the price of crude oil has risen by around 40 percent since the beginning of the year. OPEC assumes that there will be global oil demand again in 2022, as before the Corona crisis. That would mean a demand of around 100 million barrels a day. Allianz Opec plus supplies around 45 percent of this.