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Kuwait supports OPEC+ planned oil hikes; cautions about 2022 market challenges

OPEC member Kuwait supports the OPEC+ group’s planned 400,000 b/d monthly crude output hike because this phased increment approach has helped maintain supply and demand balance, the country’s oil minister said Nov. 1.

OPEC+ ministers are set to meet on Nov. 4 to discuss the course of action for December, where output is expected to increase by 400,000 b/d, according to a July agreement. The coalition has been ramping up production by 400,000 b/d per month since August, increments that will reach 2 million b/d by year-end.

“Continuation of this strategy guarantees adequate supply and it has proved it’s effective in maintaining the markets’ balance and stability,” Mohammed al-Fares said in a statement carried by state-run KUNA press agency.

The global oil market will face challenges, particularly in 2022, that justify a gradual increase in production, providing enough supplies to meet market needs, the minister added.

OPEC and its allies appear set to reaffirm plans to increase crude production by 400,000 b/d in December after an advisory committee saw no major changes in the market’s supply/demand outlook, despite calls from major consumers to further boost output to tame three-year high oil prices.

The OPEC+ Joint Technical Committee met on Oct. 28 in preparation for the Nov. 4 meeting of the coalition’s ministers.

US pressure
The coalition is under pressure from several consuming countries, including the US, Japan and India, to further ramp up its output to temper oil prices that have surged amid a global gas crisis, outages and a lack of oil investments due to climate change pledges.

Dated Brent prices have more than doubled in the last year, with S&P Global Platts assessing the benchmark at $83.63/b on Oct. 29.

US President Joe Biden lambasted Russia and Saudi Arabia, leaders of OPEC+, for not boosting their output further to dampen the oil price rally that has pushed gasolines prices in the US to above the threshold of $3/gal.

“I do think the idea that Russia, and Saudi Arabia and other major producers are not going to pump more oil so that people can have gasoline to get to and from work for example, is not right, and what we are considering doing that I am reluctant to say before I have to do it,” Biden said in a press conference following a G20 summit in Rome on Oct. 31.

US retail prices for regular-grade gasoline, which typically fall in September, are expected to stay above $3/gal for the rest of the year, according to the Energy Information Administration’s latest Short-Term Energy Outlook. The September average of $3.18/gal was $1/gal higher than a year earlier.

Saudi reaction
Saudi Arabia has rejected requests from key oil consuming countries for more supplies, with energy minister Prince Abdulaziz bin Salman saying Oct. 20 he saw no evidence of a crude shortage despite fears of a new surge in prices in the coming months.

Saudi King Salman bin Abdulaziz has affirmed the continuity of clean energy supply to the world, while calling for efforts to tackle climate change challenges.

“The kingdom shares with the countries of the world the concern about the challenges of climate change, as well as its economic and social impacts,” he said in a virtual speech at the G20 summit that started on Oct. 30, according to a copy of his speech posted on state-owned Saudi Press Agency. “The kingdom will continue its pioneering role in providing the world with clean energy by supporting more innovation and development. We call for more sustainable and comprehensive solutions that take into account the different circumstances of our countries.”
Source: Platts

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