السياسة الأعمال الاقتصاد التمويل الطاقة النفط والغاز السياسة الاقتصادية أوبك
Anas Alhajji
Anas Alhajji

@anasalhajji

11 تغريدة 32 قراءة Jul 05, 2021
Twitter
🔥Thread on why #OPEC+ meeting was delayed. Please feel free to quote.
1- The baseline for the calculation of the adjustments agreement of April 2020 was the oil production of October 2018. It has been used in all adjustments since then, including today's proposal
#OOTT #oil
2- Today's proposal consists of two parts:
a- Increase production by 2 mb/d between August & December in 400 kbd monthly installments.
b- Extend the production cut agreement from April 2022 to December 2022.
The objective is to bring order, stability & clarity to the market
3- The above are based on OPEC+ agreement to use October 2018 production as a base. All OPEC+ members appear to agree on it except the UAE
Some oil industry leaders in the UAE believe the UAE made a mistake by agreeing to a bad deal that used October 2018 as a base.
#OPEC #Oil
4- They wanted to change the base to April 2020 when the production cut was agreed on.
Why?
UAE crude oil production in October 2018 was 3.160 mb/d. But it increased to 3.841 mb/d in April 2020. By changing the base, UAE can increase its production drastically & immediately.
5- Adnoc has been aggressive in its efforts to increase its production capacity & production. It created several joint ventures with international oil companies and plans to continue increasing production. Then Murban futures were introduced in order to make it a global marker.
6- That is why the push to change the base to April 2020. They do not want OPEC+ agreement to limit their production and potential.
There are two problems here:
7- Problem 1: Moving the base to April 2020 hurts other producers who have the opposite problem: higher production in October 2018 and lower production in April 2020. Those members will NOT agree to the change in the base. So you can see now why they did not reach an agreement.
7- Problem 1: Moving the base to April 2020 hurts other producers who have the opposite problem: hi...
8- Problem 2: Any change to the base month would create confusion in the market & nullify the objectives of creating stability and clarity in the market. This explains why Saudi Arabia and Russia objected to the Emarati proposal.
#OPEC #OOTT #oil
9- While it is clear from the UAE point of view that it might have signed a bad deal without considering future increases in production, it is also clear that other OPEC+ members will not agree to the UAE proposal.
What can be done tomorrow to avoid another delay?
#OPEC #OOTT
10- The history of OPEC meetings shows that OPEC ministers will most likely pull a rabbit out of the hat! There are no benefits to the UAE from walking out of OPEC nor OPEC+ agreement. It is exactly the opposite: the results are disastrous.
11- The ultimate outcome from a game theory point of view is to increase production above 400 kbd while increasing the share of the UAE slightly or turning the blind eye to the above-quota production.
Never a dull moment in the oil market! I hope you liked the thread! #OOTT

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السياسة الأعمال الاقتصاد التمويل الطاقة النفط والغاز السياسة الاقتصادية أوبك

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