OPEC+ maintains its production policy for November

Crude prices rallied yesterday, as OPEC+ members met to decide their forward production policy for November. Dec-21 ICE Brent contract reached 81.6 $/b on early Tuesday. Interestingly, Brent-Dubai EFS, denoting the competitivity of Dubai-denominated grades against Atlantic basin grades, rallied to 4.38 $/b, which has likely been a concern for OPEC nations, as their crude remains discounted against global grades. Unsurprisingly, the group decided to continue on their planned 400 kb/d supply increase, as they project that supply will seasonally outpace demand in Q1 22, which does not justify a higher than anticipated production hike. Within this framework, big players such as the Saudis and the Russians can pump close to 9.91 mb/d in November. Interestingly, Saudi Aramco announced yesterday that they now targeted to produce 13 mb/d by 2027, in an effort to boost its production capacity, amid declining CAPEX globally. The maximum exit rate the Saudi managed to hold for more than 3 consecutive months was 10.7 mb/d, while Saudi spare capacity is believed to be closer to 12 mb/d, as the peak of April 2020 during the Saudi-Russian price war showed.  

Nigeria will have to produce at 1.64 mb/d and Angola at 1.3 mb/d, levels that are likely to be hard to reach for the two West African nations given the declining oil infrastructure and possible outages. Angolan production was already declining from 1.4 mb/d prior to the pandemic.