OPEC+ will add 500,000 barrels a day of oil output in January, giving the market more time to absorb the extra supply, according to Bloomberg Quint. The hike is a quarter of what was initially planned, and ministers will hold monthly consultations to decide whether to approve similar-sized output hikes in subsequent months.
- The revised deal is likely to keep the oil market in deficit throughout the first quarter, allowing OPEC to drain bloated inventories.
- OPEC+ nations that failed to fully implement their supply curbs in previous months will be required to keep making additional compensation cuts until March
- If OPEC had gone ahead with the full supply hike of 2 million barrels a day, the market would have flipped into surplus, threatening the recent price rally.
- The small hike will have an impact beyond crude prices to include the entire energy industry and resource-dependent countries such as Brazil and Kazakhstan.
- The compromised deal ends days of tense talks that threatened to break OPEC+ unity as countries failed to agree on the 2021 policy.
- Earlier this year, OPEC imposed production curbs by 9.7 million barrels a day as the pandemic hit demand but returned 2 million barrels a day in August.
Oil futures are currently gaining. CL! is up 0.73%
