Opec+ reaches deal to raise production from August

The Opec+ coalition agreed today a deal to boost its collective output by up to 400,000 b/d each month through to the end of next year, after reaching a compromise to adjust five of its members' baseline production rates.

The group held a virtual ministerial meeting today to end a two-week output policy impasse centred on the UAE's demand for changes to its baseline assumptions which underpin Opec+ production quotas. The UAE said at the group's previous meeting in early July that 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.

That deal would have also extended the current Opec+ agreement past its original April 2022 expiry through until the end of next year, which will allow the group more time to unwind the roughly 5.8mn b/d of output still withheld.

As a compromise to push the deal through, however, the group agreed to adjustments in baselines from 1 May 2022, not just for the UAE but also for four other members: Saudi Arabia, Russia, Iraq and Kuwait. The higher baselines will amount to an extra 1.633mn b/d between the five countries from May 2022, with Russia and Saudi Arabia accounting for almost two thirds of the increase.

The UAE, which raised its objections to the continued use of the current baseline at the last meeting, will see its baseline reference rise to 3.5mn b/d from May 2022, up 332,000 b/d from the original 3.168mn b/d baseline it accepted when the deal was first struck in April 2020, but still well below its current capacity of near 4mn b/d.

The baselines for Saudi Arabia and Russia will both rise by 500,000 b/d, from 11mn b/d to 11.5mn b/d. And Opec producers Kuwait and Iraq will see their baselines rise by 150,000 b/d from 2.809mn b/d to 2.959mn b/d, and by 151,000 b/d from 4.652mn b/d to 4.803mn b/d respectively.

By Ruxandra Iordache, Nader Itayim, Samira Kawar and Adal Mirza