The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) will add about 137,000 barrels a day next month as the group agreed to a modest increase in its November oil production.
OPEC confirmed the hike in a statement on its website on Sunday, adding that the next meeting will be on November 2.
It was reported previously that OPEC was considering raising 400-500,000 barrels per day to accelerate the wind-down of the ‘voluntary’ phase of cuts. Instead, this pace stretches the return of barrels over the course of a year.
The cartel’s leaders, Saudi Arabia and Russia, had to overcome a difference in position to make sure the decision was reached. Russia pushed for a slower return of barrels, while Saudi Arabia wanted to fight for market share.
According to Reuters, Saudi Arabia would have preferred double, triple or even quadruple that figure – 274,000 barrels per day, 411,000 barrels per day or 548,000 barrels per day respectively, because it has spare capacity and wants to regain market share more quickly.
On the other hand, Russia was advocating for a modest output increase, the same as in October, to avoid pressuring oil prices and because it would struggle to raise output owing to sanctions over its war in Ukraine.
OPEC+ output cuts had peaked in March, amounting to 5.85 million barrels per day in total. The cuts were made up of three elements: voluntary cuts of 2.2 million barrels per day, 1.65 million barrels per day by eight members and a further 2 million barrels per day by the whole group.
The eight producers plan to fully unwind one element of those cuts – 2.2 million barrels per day – by the end of September. For October, they started removing the second layer of 1.65 million barrels per day with the increase of 137,000 barrels per day.
The shift in policy after years of cuts is designed to regain market share from rivals such as US shale producers.