With oil market tight, OPEC+ decides how much more to pump

FRANKFURT, Germany (AP) — With oil prices near three-year highs, OPEC and allied countries are deciding whether to stay with their plans to gradually restoring production that was cut back during the pandemic recession — or to pump more oil to a recovering global economy that's increasingly thirsty for it.

Analyst say OPEC and its allies, known as OPEC+, will likely stick with their existing road map at an online meeting Monday. That would mean agreeing to add 400,000 barrels per day to output next month.

The plan has been to keep adding that amount through October, 2022 in order to restore the deep cutbacks made in April, 2020 that supported prices during the worst of the pandemic downturn.

But OPEC meetings can produce surprises. Crude prices have risen, and unusually expensive natural gas could lead some electricity producers in Asia to switch from natural gas to oil-based products.

OPEC and its partners are looking at a “significantly tighter oil market” than at their September meeting when there were lockdowns in parts of China and fears about the spread of the more contagious delta variant of the coronavirus, said Louise Dickson, senior market analyst at Rystad Energy.

She said that the oil ministers would likely stick to their cautious plan and wait for clearer market signals about oil demand in coming months. “In our view, they're going to take a cautious approach, because it's very uncharacteristic of OPEC to pre-emptively try to time the market."

“OPEC right now is an advantageous market position. Their barrels are in high demand... so I don't think they lose much by waiting a month in terms of timing the market,” said Dickson.

Rystad forsees oil prices staying a bit below $80 through the last three months of the year, with some slight potential upside.

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