OPEC+ confirmed two weeks ago that it would stick to its July agreement to increase output by 400,000 barrels per day (BPD) each month. However, this will be until at least April 2022 to phase out 5.8 million BPD of existing production cuts in a short affair that did nothing to address the spillover from overheating gas markets. In July, the group decided to increase output by 400,000 barrels per day per month until at least April 2022, phasing off 5.8 million barrels per day of existing production cuts–already a significant reduction from the massive limitations in place during the worst of the pandemic.
Several quarters have recently put pressure on the company to increase production at a faster rate. Including the Biden administration, to alleviate supply shortfalls and keep oil prices from soaring out of control. With last year’s oil price crash still vivid in its minds, OPEC+ is afraid of spoiling the party by making any quick or large movements. However, we may have underestimated the cartel’s ability to increase output on the fly.
According to a recent analysis, just a few OPEC+ nations can reach higher production limits than their current levels. Only Saudi Arabia, the United Arab Emirates, Kuwait, Iraq, and Azerbaijan, according to Amrita Sen of Energy Aspects, are in a position to increase output to satisfy OPEC+ quotas.
At the same time, the other eight members are likely to struggle due to severe drops in production and years of underinvestment. According to the research, Nigeria, and Angola, Africa’s oil giants, are the worst hit, with the two pumpings an average of 276kbpd below their mandates for more than a year. According to Refinitiv statistics, the two countries have a combined OPEC+ quota of 2.83 million BPD.