OPEC+ is currently cutting output by a total of 5.86 million barrels per day, equivalent to around 5.7% of global oil demand
The Organization of the Petroleum Exporting Countries and its allies, OPEC+, will go ahead with a planned oil production increase in December but first need to cut output to address overproduction by some members, two OPEC+ sources said on Thursday.
The sources said the plan did not represent any major change from existing policy after the Financial Times reported Saudi Arabia is committed to OPEC+ raising production on December 1 and dropping its unofficial $100 a barrel oil price target to win back market share.
OPEC and Saudi Arabia have repeatedly said they do not target a certain price and make decisions based on market fundamentals and in the interest of balancing supply and demand.
The output increase in December is not about regaining market share, it is about a small number of countries phasing out their voluntary output cuts, one of the OPEC+ sources said.
OPEC+, which groups OPEC members and allies such as Russia, is scheduled to raise output by 180,000 bpd in December. Iraq and Kazakhstan have pledged to cut 123,000 barrels per day in September to compensate for earlier pumping above agreed levels.
When the compensation plan and production figures from those countries becomes clear for September then that will allow the increment to come in as the impact of the increment will be negligible, one of the OPEC+ sources said, referring to the December increase.
OPEC+ is currently cutting output by a total of 5.86 million barrels per day, equivalent to around 5.7% of global oil demand. Earlier this month, they delayed the plan to boost output after oil prices declined to a nine-month low.
Global crude benchmark Brent was down nearly 2.5% to below $72 a barrel at 1420 GMT.
A panel of top ministers from OPEC+ called the Joint Ministerial Monitoring Committee is scheduled to meet on October 2 to review the market and is not expected to make any changes to policy.
