0613 GMT October 17, 2021
OPEC and its allies will convene Sept. 1 in a volatile oil price environment amid pressures to increase crude supplies and concerns about the world's continued struggles with COVID-19 variants.
The hazy outlook for the market has led to equally hazy expectations for the OPEC+ meeting.
One delegate told S&P Global Platts the group could consider pausing its previously agreed output increases to stabilize prices, while two others said they didn't expect any changes as long as Brent remains above $60/b.
Uncertainty prevails. We all need to consider what is next," a fourth delegate said.
None of the delegates, who spoke on condition of anonymity, mentioned boosting output beyond what's already planned.
OPEC, Russia and nine other countries agreed in July to increase crude production by 400,000 bpd starting August through the end of 2022, a quantity that many analysts said would be insufficient to meet demand in the short-term, given seasonal consumption patterns and the world's recovery from the pandemic.
Rising US gasoline prices prompted the Biden Administration on Aug. 11 to urge OPEC+ members to pump more oil, criticizing the latest supply pact as "simply not enough" and accusing the producer bloc of endangering the global economy.
Just days later, OPEC warned in its monthly oil forecast that the market appears to remain tight through the end of 2021, while the International Energy Agency, or IEA, lowered its estimate of 2021 demand growth, citing more COVID-19 cases in China, Indonesia and elsewhere in Asia.
China has imposed lockdowns to curb the rise in infections, while Japan has also instituted emergency measures.
Beyond 2021, both OPEC and the IEA have forecast significant oil surpluses starting in the first quarter of 2022.
Amid these signals, the OPEC+ coalition's delegate level Joint Technical Committee will meet Aug. 31 to assess market conditions and determine member compliance with production quotas. The advisory Joint Ministerial Monitoring Committee will convene on Sept. 1, followed later in the day by the full OPEC+ ministerial meeting.
The 22-country OPEC+ alliance, which collectively controls about half of global crude production, has broadly agreed to gradually roll back the historic production cuts it instituted last spring.
But, unable to settle on a long-term plan, the bloc has taken to setting monthly quotas, which officials have said will allow it to be flexible in rapidly changing market conditions.
A routine meeting would be a welcome respite after the past few months' gatherings saw acrimonious cracks emerge among countries that want to pump more crude as oil demand has perked up, such as Russia and the UAE, and others that have urged restraint in the face of a still uncertain pandemic trajectory, including Saudi Arabia.
In an Aug. 27 note, S&P Global Platts Analytics said its reference case "assumes that market conditions will provide sufficient confidence to continue increasing quotas, but history indicates OPEC+ will act cautiously in the face of demand uncertainty."
The potential resumption of Iran nuclear talks will also bear watching. Most of new Iranian President Seyyed Ebrahim Raeisi's cabinet was approved by the Parliament on Aug. 25, including Oil Minister Javad Owji, a gas industry veteran who will be attending his first OPEC+ meeting, and Foreign Minister Hossein Amirabdollahian, who will presumably lead Tehran's negotiating team at the nuclear talks, if they resume.
If Iran and the US can strike a deal that relieves sanctions, Platts Analytics says Iranian crude and condensate exports could grow 600,000 bpd by the end of 2021.
Asia is witnessing signs of rising mobility, improving the demand outlook for transportation fuels. It has also raised hopes for a sustained oil products demand revival in the region after a long period of weak consumption growth.
*Claudia Carpenter and Herman Wang cover oil and gas markets and renewable fuels from Platts' editorial office in Dubai.
This article originally appeared on spglobal.com.