The OPEC+ group could start talks about establishing the baselines for individual members’ production quotas for 2027 as early as today, delegates from the alliance told Reuters on Wednesday.
Some big OPEC producers, such as Iraq, the United Arab Emirates (UAE), and Kuwait, plan to raise their oil production capacity in the coming years. These countries have argued that they deserve higher baseline production levels as they expand capacity. The UAE, for example, has won a higher baseline for 2025 and 2026.
The baselines are important in OPEC and OPEC+’s calculations of output quotas when the cartel or the wider group implements cuts.
At a meeting today, OPEC+ is expected to ask OPEC to begin drafting the mechanism to use in assessing the baselines for 2027, according to one of Reuters’ sources.
At a separate meeting this weekend, OPEC+ producers who are restricting supply are expected to adopt the production plan for July 2025—which will be another 411,000 barrels per day (bpd) hike, the sources among the group’s delegates told Reuters. If agreed on, the July production increase will be the third consecutive monthly hike that would be triple the initially planned volumes.
In a hint that OPEC+ would respond to rising oil demand with output increases, UAE’s Energy Minister Suhail Mohamed Al Mazrouei said earlier this week that OPEC+ must consider rising oil demand when it makes decisions about production levels.
OPEC+ ministers are discussing the idea of making another big production increase in oil production for July, delegates from the group told Bloomberg News last week. Analysts expect a 411,000-bpd hike.
The latest OPEC+ production policies suggest that top OPEC producer Saudi Arabia is willing to endure a short-term pain with lower oil prices to punish the overproducers in the OPEC+ deal and to start spoiling the shale party in the United States. In America, shale producers are cutting spending and scaling back drilling activity with WTI oil prices close to or lower than the breakeven price for profitably drilling a new well.
By Tsvetana Paraskova for Oilprice.com
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