“If it ain’t broke, don’t fix it.” This is the mantra followed by the UAE on potential changes in the OPEC+ production plan. OPEC’s current production accord adds 400,000 barrels daily, ensuring a steady and organized Covid-19 recovery. With the current production levels, the oil price per barrel hovers around $75 — a 45% increase compared to last year (we’re talking about the Benchmark Brent crude). OPEC’s goal is to keep oil prices around $70 per barrel in the first quarter of 2022.
The risk of increasing OPEC’s current production levels is oversupply. In the short run, however, an increase could prove beneficial in helping to offset the losses caused by Hurricane Ida in the US. The hurricane caused a production loss of 1.7 million barrels a day.
why it matters
While keeping the current production levels sounds good to the UAE, other OPEC+ members may disagree. Iraq, for example, expects a production increase after the upcoming October 4 meeting, if prices stay at the current level.