Tensions in the Middle East decrease OPEC’s output target

Abdelrahman Mohamed, World / Business Editor

The Organization of the Petroleum Exporting Countries (OPEC) and its allies are set to debate at least two scenarios that would increase oil production beyond current levels. A group of key OPEC producers are going to hold a meeting on Sunday as rising tensions in the Middle East add to output outages. However, no decision will be made at the summit, they will merely debate the issues and make recommendations to be acted on at OPEC’s next full meeting in Vienna in June. OPEC and its partners agreed in December to output cuts of 1.2 million barrels a day, which led to a rebound in oil prices this year. The officials gathering this weekend are looking for a way forward for the second half of this year that will not negatively affect oil markets.

One scenario, presented to delegates late Friday, assumes OPEC and non-OPEC countries are fully complying with their commitments through May and June. Since some countries are currently cutting more than agreed, if all the countries reverted to the December-agreed levels, their collective output would be the equivalent of an increase of 396,000 barrels a day for participating members of the cartel and 411,000 barrels a day for the Russia-led non-members from April levels, based on OPEC data.

Another scenario would allow individual producers to use as their baseline for cuts the maximum level they reached in one of the last four months of 2018.