Specifically, Prince Abdulaziz expects demand for oil to return to 97% of pre-Covid levels.
This 97% is also the compliance rate reached by OPEC + in July, after pledging to reduce the group’s oil production levels by 9.7 million barrels per day.
Saudi Arabia has relied heavily on members of the group who did not comply with the cuts to the same level of duty – and painful – as Saudi Arabia. The group’s laggards include Iraq and Nigeria, which missed their quotas by wide margins.
In response, Nigeria and Iraq – along with other laggards from Kazakhstan and Angola – agreed to continue to cut production enough to make up for the lack of compliance over the past two months.
“We must strive to put this temporary compensation scheme behind us, eliminating all past overproduction by the end of September,” Prince Abdulaziz said ahead of the meeting.
But it would indeed be an ambitious undertaking for Nigeria and Iraq, which have struggled to comply with all OPEC agreements so far, and who have not shared any specific plans to scale up production. oil in accordance with the group’s agreement.
Regardless of the poor performance of laggards, Prince Abdulaziz noted that the oil market has shown signs of improvement with lower global inventories, lower floating storage and a resumption in demand for gasoline and diesel.
Oil prices traded slightly lower on Wednesday, even after the EIA reported crude oil and gasoline inventory declines for the week, and even after Prince Abdulaziz’s positive talking points.
By Julianne Geiger for OilUSD
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