Through Salma el wardany to 10/18/2021
(Bloomberg) – OPEC and its allies have once again failed to pump enough oil to meet their production targets, worsening the supply deficit as the world recovers from the coronavirus pandemic.
OPEC + cut production 15% deeper than expected in September, down from 16% in August and 9% in July, according to delegates familiar with the matter.
This reflects the inability of some members – including Angola, Nigeria and Azerbaijan – to increase production to agreed volumes due to lack of investment, exploration and other issues. In theory, OPEC + could have pumped an additional 747,000 barrels per day in September and remained within the agreed production limit.
The Organization of the Petroleum Exporting Countries and its allies, including Russia, have come under pressure from major consumers to step up the pace of their supply increases. Those calls got louder as the energy crisis engulfed Europe, sending electricity prices to record highs.
Brent hit its highest level since October 2014, as some power producers turn to oil, alongside the global recovery. Asian demand for US crude is also increasing, as the energy crisis pushes the prices of other grades higher than the global benchmark Brent.
The latest push came from Japanese Prime Minister Fumio Kishida who urged producers on Monday to increase production in the face of recent price hikes. He added that his government is monitoring price trends in the market to assess its impact on domestic industries.
If prices don’t turn around, the next OPEC + meeting on November 4 could take place with increased political pressure from consumers.
The meeting will also coincide with the climate discussions at COP26 in Glasgow. As world leaders come together to extract more ambitious pledges from governments and global companies to avert a climate catastrophe, attention to the producer group will be even higher.