London, 7 September (Argus) — Eight core Opec+ producers have agreed to return more crude to the market next month, the Opec secretariat said today.
Saudi Arabia, Iraq, Kuwait, Russia, the UAE, Algeria, Oman and Kazakhstan are set to begin unwinding 1.65mn b/d of output cuts starting in October, with an initial 137,000 b/d rise to their collective crude production targets.
The size of additional increases beyond October is less clear as the group chose not to provide any specific output guidance. The remaining volumes “may be returned in part or in full subject to evolving market conditions and in a gradual manner,” Opec said.
The 1.65mn b/d set of cuts were agreed in April 2023 and originally included a small contribution from Gabon, which is not included in the latest plan to return output.
The move follows the completion this month of a process to unwind a 2.2mn b/d tranche of cuts — agreed in November 2023 — by the same eight members.
The group stressed that it was following a “cautious approach” and reiterated that it retains “full flexibility to pause or reverse,” not just the latest production increase, but also previous increases related to the 2.2mn b/d cut.
The actual production increase in October, however, is likely to be lower than the headline 137,000 b/d, due to ongoing compensation commitments by past overproducers, and upstream and midstream constraints on output in some members such as Russia and Iraq.
This is similar to what was happening during the unwinding of the 2.2mn b/d set of cuts. The group of eight increased output by 1.35mn b/d between April and August, according to Argus estimates, far short of the notional 1.92mn b/d quota hike, for example.
But the latest plan to raise output could be risky. The world is about to enter a seasonal lull in oil demand and the IEA is projecting large supply surpluses in the fourth quarter and 2026.
Ice Brent crude futures closed at $/bl on 5 September, down by about $3/bl since the group last met in early August.
The eight members are scheduled to meet again on 5 October.
By Aydin Calik, Nader Itayim and Bachar Halabi
