OPEC and its allies agreed at a meeting on Nov. 4 to stick to plans to raise oil output by 400,000 bbl/d from December, despite calls from the U.S., for extra supply to cool rising prices.
The White House said Washington would consider a full range of tools at its disposal to guarantee access to affordable energy.
All oil producers suffered a drop in income during the COVID-19 pandemic and as demand recovers with the global economy it has allowed them to rebuild their balance sheets. OPEC+ supply restraint has underpinned a rally that has pushed global benchmark Brent crude to a three-year high of $86.70.
Top OPEC producer Saudi Arabia has dismissed calls for speedier oil supply increases from OPEC and its allies, collectively known as OPEC+, citing economic headwinds.
OPEC+ sources said the U.S. has plenty of capacity to raise production itself if it believes the world’s economy needs more energy. Sources have said Saudi Arabia and Russia are becoming more confident that the higher prices will not elicit a fast increase in output by the U.S. shale gas industry.
Producers are concerned about going too fast, fearing renewed setbacks in the battle against the pandemic and the speed of economic recovery, Saudi Energy Minister Prince Abdulaziz bin Salman said on Nov. 4.
He said oil stocks will see “tremendous” builds at the end of 2021 and early 2022 because of slowing consumption.
Russian Deputy Prime Minister Alexander Novak said that since August OPEC has already added 2 million bbl/d to global supply and will continue with its plan to add another 400,000 bbl/d each month in the later part of 2021 and the early months of 2022.
“There are some signs of decreased oil demand in the European Union in October. Global oil demand is still under pressure from the Delta COVID variant,” Novak said, explaining why OPEC+ has chosen not to add more barrels.
U.S. President Joe Biden had on Oct. 30 urged major G20 energy producing countries with spare capacity to boost production to ensure a stronger global economic recovery.
His statement is part of a broad effort by the White House to pressure OPEC and its allies to increase supply.
“OPEC+ seems unwilling to use the capacity and power it has now at this critical moment of global recovery for countries around the world,” a White House spokesperson said on Nov. 4.
“The President believes Americans should have access to affordable energy, including at the pump, and has directed us to continue monitoring the markets and be prepared to use all tools as needed,” the spokesperson said.
The world’s largest oil producer, the U.S., which is not part of OPEC+, saw its production fall steeply in 2020 and production has since recovered much slower than anticipated.
OPEC+ will meet again on Dec. 2.
Recommended Reading
Subsea 7 Secures Sizable GoM Contract
2024-08-16 - Offshore activity on Subsea7’s project is expected to begin in 2026.
US Drillers Cut Oil and Gas Rigs for Second Time in Three Weeks
2024-08-16 - The oil and gas rig count fell by two to 586 in the week to Aug. 16.
Trillion Reports Revitalized Gas Field Production Offshore Turkey
2024-08-14 - Trillion Energy produced 140 MMcf in the SASB gas field in its first 35 days of production.
Shell Offshore Takes FID on Waterflood Project in GoM
2024-08-14 - Shell Offshore’s waterflood secondary recovery process involves injecting water into the reservoir formation to extract oil.
IOCs See Opportunity in Offshore Mexico, Despite Potential for Policy Changes
2024-08-14 - Five IOCs with offshore experience and capital—Eni, Harbour, Talos, Wintershall Dea and Woodside—continue to pursue promising opportunities offshore Mexico despite the country’s energy sovereignty push in favor of state-owned entities Pemex and CFE.