OPEC + ministers will meet on Sunday to try to agree on a rapid increase in oil supplies to deal with soaring oil prices as the global economy recovers from the coronavirus pandemic.
The group, which includes OPEC countries and allies like Russia, failed to resolve the disagreement over a new production policy between Saudi Arabia and the United Arab Emirates earlier this month ( WATER).
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OPEC + agreed to record production cuts of nearly 10 million barrels per day (bpd) last year to deal with a pandemic-induced drop in demand and gradually released them to around 5.8 million by bpj.
The group had planned to ease the cut by an additional 2 million bpd from August to December 2021, as oil prices hit 2.5-year highs.
An OPEC + source told Reuters on Sunday that the main OPEC + producers had already reached a preliminary agreement on the gradual increase in oil production until December 2021 and the extension of their global pact until late 2022, but some details have yet to be agreed.
While Riyadh and the United Arab Emirates favored an immediate increase in production, the United Arab Emirates had opposed the Saudi idea of extending the global supply management pact until December 2022 compared to the current plan to end it in April 2022.
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The UAE has argued that it wants a higher production quota if the pact is to be extended.
A higher production quota for the United Arab Emirates and potentially for other members like Iraq and Kuwait will be on the agenda Sunday, according to three OPEC + sources.
Producers must decide when these higher production quotas, called reference levels, would be put in place. Sources told Reuters that the UAE could see its baseline rise to 3.65 million bpd as of April 2022, from 3.168 million currently.
It is also unclear from what month OPEC + would release more oil into the market – August could be difficult as Saudi Arabia had already set official selling prices for its oil and the release of additional barrels could disrupt existing customers.
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Sunday’s meeting will be held virtually and will start at 10 a.m. GMT, OPEC said.
(Reporting by Olesya Astakhova, Rania El Gamal and Dmitry Zhdannikov; written by Dmitry Zhdannikov; edited by Elaine Hardcastle)