Opec+ January quotas raised on a pro rata basis

Opec+ will divide next month's scheduled increase in crude production on a pro rata basis among the 19 countries participating in the group's output restraint pact.

The alliance agreed yesterday to raise their collective output ceiling by around 500,000 b/d in January, and to hold ministerial meetings to decide future adjustments on a month-by-month basis. It marks a compromise between the group's original plan to raise output by almost 2mn b/d from January and a proposal to roll over existing production quotas.

The group's largest producers, Saudi Arabia and Russia, will see their individual January production caps rise by 126,000 b/d each to 9.12mn b/d. The collective production target of the 19 deal participants will be 34.9mn b/d in January, which is over 630,000 b/d higher than actual output in October, according to Argus estimates. Next month's target is a reduction of around 17pc from baseline production, whereas the ceiling in August-December was around 18pc lower.

Production could fall below 34.9mn b/d if countries with shaky compliance levels adhere to a compensation mechanism obliging them to make up for past overproduction with additional cuts. The deadline for members to fully compensate has been pushed back repeatedly, and it is now set to run until the end of March next year.

Some Opec+ members already pencilled in their January crude export allocations ahead of yesterday's decision. Nigeria has scheduled at least 1.29mn b/d to load next month, while Angola and Congo (Brazzaville) have scheduled 1.18mn b/d and 238,000 b/d, respectively. But the large Mideast Gulf producers — such as Saudi Arabia, Kuwait, Iraq and deal-exempt Iran — have yet to conduct their January term supply allocations, allowing them greater flexibility to respond.

Trade sources had expected state-controlled Saudi Aramco to publish its official January crude formula prices on 3 December, but now expect them on 6 December. Yesterday's Opec+ ministerial meeting was originally planned for 1 December but was postponed to allow for further consultation. Saudi Arabia has repeatedly delayed issuing its formula prices until after Opec+ meetings.

Russia's January ESPO Blend export programme was released earlier this week, but the country's schedule for Urals is not expected until 25 December. "We have discussed it with oil companies and we are ready to make such an increase in production. It is winter, but we do not see any problems to raise output," Russian deputy prime minister Alexander Novak said.

By Rowena Edwards and Ruxandra Iordache