OPEC+ agrees to raise crude production

OPEC+ crude production will be 2m barrels a day higher by December this year compared to current production after the group decided yesterday to raise production by 400,000 barrels a day each month from August.

This increase will likely continue into next year until the entire 5.8m barrels of day of production currently withheld from the markets has been restored with OPEC+ set to re-evaluate the monthly increases at a meeting scheduled for December.

“The agreement is welcome news for tanker markets, especially with refinery throughout likely to be 3m b/d higher in q4 2021 versus the output in q2 2022,” tanker analysts at Braemar ACM suggested in a note to clients, adding: “Higher production is also likely to ease the need for crude stock drawdowns and be a catalyst for higher seaborne crude trade as refinery runs rise.”

Also commenting on the OPEC+ news, analysts at Jefferies suggested: “We believe this will provide the crude tanker shipping market the tailwinds necessary to slowly increase rates during 3Q20 and more meaningfully in 4Q21.”

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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