The UAE and Kuwait said they would support any collective OPEC+ decision made on oil production levels, amid market discussion that the group could offset a US-led multi-country strategic petroleum reserve release by canceling a planned output increase.
In separate statements issued through their official news agencies Nov. 25, the UAE and Kuwait said no decision had been made yet ahead of OPEC’s meeting Dec. 1, which will be followed by talks with Russia and nine other allies in the OPEC+ supply accord Dec. 2.
“The consultations that accompany such important meetings have not started yet, and no position has crystallized for the state of Kuwait so far regarding the direction of OPEC+,” Kuwaiti oil minister Mohamed al-Fares said.
The UAE energy ministry “reiterates that any decisions will be taken collectively by the OPEC+ group in its next ministerial meeting,” it said in its statement.
The meetings will decide the group’s January production levels. The existing pact calls on OPEC+ countries to hike output quotas by 400,000 b/d, though the volumes can be changed per market conditions.
Some OPEC+ delegates have told S&P Global Platts the alliance could pause its next scheduled increase if the SPR barrels exacerbate what is expected to be a market oversupply in the coming months.
A further ratcheting of coronavirus lockdown measures in Europe may also prompt the OPEC+ alliance to delay or withhold its production increases, sources have said.
Ministers “will assess the market as they usually do prior to any OPEC+ meeting and decide accordingly,” one Gulf delegate told Platts.
Crude prices have tracked higher since the US said Nov. 23 it was coordinating an SPR release with China, India, Japan, South Korea and the UK, with many details on how much crude will be put on the market and when still to be announced.
The US has committed to a 50 million-barrel release, of which 18 million barrels were already planned but are being accelerated. India has agreed to release 5 million barrels of crude oil from its SPR, while China is poised to auction another tranche of crude from its reserves.
A South Korean government source indicated to Platts that the country could offer about 3.8 million barrels, and Japan’s minister of economy, trade and industry said its sales could amount to “a couple of hundred thousand kiloliters.”
Front-month ICE Brent futures were trading at $82.27/b at 0812 GMT, up from $79.70/b at the close of Nov. 22, the day before the coordinated SPR release was announced.
The US, Japan and India had publicly lobbied OPEC+ ministers to go beyond their planned monthly 400,000 b/d production increases to cool off a surging market that they said was endangering the global recovery from the pandemic.
But the OPEC+ alliance has so far rebuffed those requests, citing several forecasts, including from the International Energy Agency and the US Energy Information Administration, that the market would tip from deficit to surplus by January.