OPEC+ Reverts to August Output Levels with 100K Bpd Cut

OPEC+ has reverted to the oil output level of August 2022 after deciding to cut 100,000 bpd for October, noting that “the upward adjustment of 0.1 mb/d to the production level was only intended for the month of September 2022.” The Group’s decision follows Saudi Arabia voicing concerns over the volatility of the oil market. The group had agreed to raise the output by 100,000 bpd for September following the visit of US president Joe Biden in August.  

Further, the 32nd OPEC and non-OPEC Ministerial Meeting noted that higher volatility and increased uncertainties require the continuous assessment of market conditions and a readiness to make immediate adjustments to production in different forms if needed.

As of this writing, Brent crude stood at $95.02 per barrel while WTI was at $88.64 per barrel.

Analysts have said the cut was mostly symbolic and had limited impact on actual supply given that OPEC+ had been producing below production targets. OPEC+ is estimated to be producing 2.9 million bpd short of their collective quotas.

Other current dynamics impacting the oil market include the COVID-19 lockdowns in China, where consumption reportedly shrunk to a 2-year low by 9.7% in July, and the G7 countries' agreement to put price caps on Russian oil exports. Russia has maintained that it will not sell oil to countries that impose the policy.

European gas prices surged over 25% on Monday after Russia’s energy giant Gazprom’s announcement to halt the Nord Stream 1 gas supplies to Europe indefinitely, citing maintenance issues.

Source: OPEC

Separately, OPEC’s new Secretary General Haitham Al Ghais has said that more than $12 trillion in investment will be needed across the value chain between now and 2045 to help meet expected growth in oil demand.