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OPEC Panel Recommends No Change To Pace Of Output Hikes, Ignoring And Angering Biden

Courtesy of ZeroHedge View original post here.

Update (10:10am ET): As widely expected, oil producers have completely ignored Biden's pleas and/or demand for an output hike, and a  panel of OPEC+ ministers recommended sticking to their current pace of gradual production increases: after a brief video conference, the group’s Joint Ministerial Monitoring Committee (or JMMC), which oversees OPEC+ production cuts, recommended a 400,000 barrel-a-day supply increase for December, delegates said. That’s a pace that major consumers say is too slow to sustain the post-Covid economic recovery, contributing to an increase in crude prices of about 30% since August.

OPEC+ will now consider the recommendation at a full ministerial meeting, where it is expected to endorse the recommendation. According to Bloomberg, once the cartel rejects U.S. pleas to boost oil supply, "it could face a bare-knuckle fight with the White House, amid growing speculation that the U.S. could tap emergency crude stockpiles in an effort to drive down prices." We doubt it, after all Joe Biden hardly has any idea where he is at any given moment.

That said, even without formally boosting output, there could be some room for the group to accelerate the pace of supply increases, if it wishes. In the last few months, the group has consistently failed to hit its own output targets due to production woes at members including Nigeria and Angola. Other nations, such as Saudi Arabia and the United Arab Emirates, have sufficient capacity to pick up the slack, although their deal hasn’t had any mechanism for doing so.

The group will hold a press conference after its meeting, currently scheduled for 3:30 p.m. Vienna time, delegates said.

* * *

OPEC+, which meets later Thursday via video conference, has shown little signs it plans to waver from its plan to raise oil production gradually, despite pressure from senile presidents and consuming nations to temper high prices.

The OPEC+ alliance’s plan is to raise output by 400k b/d each month to remove previous cutbacks. That’ll increase the collective December target for 20 nations to 40.094m b/d…

… and all analysts in a Nov. 2 Bloomberg survey expect OPEC+ to ratify that today

Meanwhile, overnight Bloomberg reported quoting delegates and diplomats, that the U.S. had asking OPEC+ to increase production in December by between 600k-800k b/d, between 50% and 100% higher than the planned increase. And since OPEC+ will throw up all over this proposal – previously, both the Iraqi (Oct. 30) and Nigerian (Oct. 25) ministers said the planned 400k b/d increase is enough – the report noted that the US will accept the minimum 400k b/d increase if it comes with a pledge for other OPEC+ members to compensate if some fall short. Earlier this week we learned that OPEC delivered only about half of its October output increase as Angola and Nigeria struggled to pump more.

Sepratately, the U.S. and other consuming nations could potentially release oil from government- strategic stockpiles if they deem it an emergency, although such a move would hardly look prudent at a time when the entire world is pretending to care about the environment.

Going back to today's OPEC+ meeting, Saudi Arabia cautioned that the coronavirus pandemic, which caused demand to plunge in 2020, is not yet over, while Iran has emerged  as another variable: with nuclear talks due to resume Nov. 29, there’s a growing possibility of an eventual lifting of U.S. sanctions, potentially unleashing more than 1m b/d of crude for export on global markets.

And with oil prices having tumbled in the past three days as algos and CTAs misread Biden's leverage in controlling what OPEC+ can and can not do, we are finally seeing some reversal as the grown ups finally take control.


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