OPEC+ weighs oil cuts extension, sees weaker compliance

File – Logo of the Organization of the Petroleum Exporting Countries. (Reuters)

SULAIMANI (ESTA) — OPEC and allies including Russia are leaning towards postponement of a planned January increase to oil output by at least three months to support prices as the COVID-19 pandemic continues its second wave, sources told Reuters on Monday.

The OPEC+ group of producers was due to raise output by 2 million barrels per day (bpd) in January – about 2% of global consumption – as part of a steady easing of record supply cuts implemented this year.

But with demand for fuel weakening, OPEC+ has been considering delaying the increase or even making further cuts.

An option gaining support among OPEC+ nations to keep the existing curbs of 7.7 million bpd for a further three to six months, OPEC+ sources told Reuters, rather than tapering the cut to 5.7 million bpd in January.

“A three-month extension is highly likely,” said one OPEC+ source.

Two OPEC+ committees are meeting virtually this week. The Joint Technical Committee (JTC) held its meeting on Monday and the Joint Ministerial Monitoring Committee, which can recommend policy steps to OPEC+, meets on Tuesday.

OPEC+ will have a full meeting on Nov. 30 and Dec. 1 to decide output policy for next year.

Monday’s JTC meeting also discussed figures showing OPEC+ compliance with pledged curbs was 96% in October – less than previously thought – after inclusion of compensatory cuts for past excess production by some countries, an OPEC+ source said.

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