Opec+ in talks to resume ministerial talks tomorrow

The Opec+ coalition is in discussions to restart ministerial talks as early as tomorrow as it looks to end a two-week output policy impasse, two delegates said.

An official invitation letter has yet to be circulated among members, according to several delegates.

Opec+ ministers have so far failed to agree on production policy beyond this month, leaving open the possibility of a rollover of July quotas into August — a move the IEA said could see oil markets "tighten significantly as demand rebounds from last year's Covid-induced plunge."

The group had on 1-2 July debated a 400,000 b/d monthly output hike each month from August into next year, with an option to pause the increases for up to three months in response to any unforeseen changes in market dynamics. Should the group choose not to invoke this clause, it will unwind the roughly 5.8mn b/d of output still withheld by September 2022.

That proposal would also see the group's deal extended past its original April 2021 expiry through until the end of next year. But the UAE said it would not back the plan unless its production baseline — on which its quota and compliance level are calculated — was revised to better reflect its bolstered capacity. Abu Dhabi had accepted a 3.168mn b/d reference level last May, significantly below its current capacity of near 4mn b/d.

Earlier this week, Saudi-UAE bilateral discussions introduced the possibility of adjusting the UAE baseline to 3.65mn b/d, although no formal proposal was put forward. One delegate today said the new discussions could center on prospectively raising the UAE baseline by a lesser 300,000 b/d.

All Opec+ deals must win unanimous approval from coalition members, leaving it unclear if other participants who have previously requested adjustments to their own obligations would endorse such a revision.

By Ruxandra Iordache and Samira Kawar