OPEC+ maintains grip on global supply, records 113% compliance

Sopuruchi Onwuka

Global petroleum market factors, the Organization of Petroleum Exporting Countries (OPEC) and its allies, have registered positive control of crude oil supplies towards the twin targets of adequately fuelling socio-economic activities while returning value for investors and resource holders.

The Oracle Today reports that OPEC members and key non-member producers had in 2016 formed collaboration in arresting supply glut in the international petroleum market and consequent price dive, thus staving off commercial gloom hat would have sunk the industry and exposed the financial markets to meltdown.

Dr. Mohammed Barkindo

Since then, the 24 countries in the coalition known as OPEC+ have resiliently maintained highly disciplined output guides and production quotas that balance market forces and guarantee supply sustainability.

At its 19th Ministerial Meeting on Sunday, the OPEC+ pointed at healthy interplay of market forces. It attributed to hearty market signals to members’ high conformity to production adjustments which stood at 113 percent in June.

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“The Meeting noted the ongoing strengthening of market fundamentals, with oil demand showing clear signs of improvement and OECD stocks falling, as the economic recovery continued in most parts of the world with the help of accelerating vaccination programmes.

“The Meeting welcomed the positive performance of Participating Countries in the Declaration of Cooperation (DoC). Overall conformity to the production adjustments was 113% in June (including Mexico), reinforcing the trend of high conformity by Participating Countries,” OPEC declared in a statement.

The group also resolved to “Reaffirm the Framework of the Declaration of Cooperation,” and “extend the decision of the 10th OPEC and non-OPEC Ministerial Meeting (April 2020) until the 31st of December 2022.”

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The decision would entail gradual release production volumes earlier reigned in during the demand destruction of 2020.

OPEC stated that the coalition would add some 400,000 barrels of crude per day on monthly basis starting August 2021 until phasing out the 5.8 million barrels per day (mb/d) production adjustment. The coalition is also to assess market developments and participating countries’ performance in December 2021.

OPEC+ would also hold tight to its monthly ministerial meetings to assess market conditions and decide on production level adjustments.

The group also set targets to adjust the baseline for the calculations of the production adjustments by May 2022, and end production adjustments by the end of September 2022, “subject to market conditions.”

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OPEC+ reiterated the imperatives of full conformity to quota guidelines, and urged members in default to take advantage of the extension of the compensation period until the end of September 2021.

“Compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC Ministerial Meeting.”

The 20th OPEC and non-OPEC Ministerial Meeting is scheduled for September 1, 2021.

 Reference Production up to end of April 2022Reference Production effective May 2022
Saudi Arabia1100011500
South Sudan130130
OPEC 102668327815

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