Opec+, the producer alliance behind historic oil market corrections, is likely to gradually increase supply as it looks to drain inventories while placating members with biting economic needs.
The group, led by Saudi Arabia and Russia, two of the world's largest producers, are convening for an extraordinary meeting on January 4 to assess current oil market metrics as well as overall compliance among producers.
The meeting follows a protracted online annual gathering last month, where the producers agreed to increase production by 500,000 barrels per day.
Opec+ agreed to cut output by 7.2 million bpd for three months until the end of March. However, the group, which was originally scheduled to bring on stream nearly 2m bpd by the beginning of the year, will have to accommodate various interests of producers who are looking to cash in on higher prices to offset difficult economic conditions.
Brent, the international marker, has traded above $50 per barrel for nearly half of December and settled 0.33 per cent higher at $51.8 per barrel on Friday. West Texas Intermediate, which tracks US crude, has also trended higher, settling at $48.52 per barrel, up 0.25 per cent.
The benchmarks have been buoyant amid positive news on vaccines, as several countries roll out inoculation programmes. However, Covid-19 cases are on the rise across the world during the December-January holiday season and nations remain wary of a new, more infectious, strain of the virus that originated in the UK.
The temptation to increase output is particularly strong among producers such as Iraq, whose economy has been squeezed by lower global demand for crude amid the pandemic and its domestic health crisis.
Baghdad last month devalued its currency by around 23 per cent against the US dollar, the first adjustment in the currency peg since 2015.
Under the country’s provisional budget, an allocation of 150 trillion dinars ($103 billion) was earmarked for spending, against expected revenue of 92tn dinars, leaving the government with a gaping deficit.
Iraq, which relies on sale of hydrocarbons for over 90 per cent of its revenue, has been looking to export more in order to plug this gap.
The country has also repeatedly flouted its output quota within Opec+ and has been singled out to make compensatory cuts to maintain the group's compliance levels.
Opec+ can be expected to add "another 500,000 bpd" in February as Brent trades above $50 per barrel, said Giovanni Staunovo, commodity analyst at UBS.
"Russia has already indicated that they support a further production increase. Obviously there will be pressure to select a more cautious policy with ongoing risks due to the pandemic impacting negatively the oil demand recovery, but Russia has indicated the preference to prevent a too early return of investment and production activity in non-Opec+ country while the group holds elevated spare capacity itself," he added.
Opec+ will have to tread cautiously to accommodate interests, such as that of the UAE, Opec's third largest producer, which has been vocal about lack of compliance by certain members. The UAE had pushed for stricter compliance and increasing production gradually as Opec+ had previously indicated during its historic April 2020 agreement.
"What they're going to do is ... to eventually commit to the 2m bpd deal," said Stephen Innes, chief global market strategist at Axi.
"But it's just going to be stretched over a couple of months. The next production increase is going to be very critical," he added.
Day 1, Dubai Test: At a glance
Moment of the day Sadeera Samarawickrama set pulses racing with his strokeplay on his introduction to Test cricket. It reached a feverish peak when he stepped down the wicket and launched Yasir Shah, who many regard as the world’s leading spinner, back over his head for six. No matter that he was out soon after: it felt as though the future had arrived.
Stat of the day - 5 The last time Sri Lanka played a Test in Dubai – they won here in 2013 – they had four players in their XI who were known as wicketkeepers. This time they have gone one better. Each of Dinesh Chandimal, Kaushal Silva, Samarawickrama, Kusal Mendis, and Niroshan Dickwella – the nominated gloveman here – can keep wicket.
The verdict Sri Lanka want to make history by becoming the first team to beat Pakistan in a full Test series in the UAE. They could not have made a better start, first by winning the toss, then by scoring freely on an easy-paced pitch. The fact Yasir Shah found some turn on Day 1, too, will have interested their own spin bowlers.
COMPANY%20PROFILE
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Major honours
ARSENAL
BARCELONA
- La Liga - 2013
- Copa del Rey - 2012
- Fifa Club World Cup - 2011
CHELSEA
- Premier League - 2015, 2017
- FA Cup - 2018
- League Cup - 2015
SPAIN
- World Cup - 2010
- European Championship - 2008, 2012
UAE currency: the story behind the money in your pockets
Springtime in a Broken Mirror,
Mario Benedetti, Penguin Modern Classics
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
MATCH INFO
Mumbai Indians 186-6 (20 ovs)
Kings XI Punjab 183-5 (20 ovs)
Mumbai Indians won by three runs
The specs
Engine: 2.9-litre twin-turbo V6
Power: 540hp at 6,500rpm
Torque: 600Nm at 2,500rpm
Transmission: Eight-speed auto
Kerb weight: 1580kg
Price: From Dh750k
On sale: via special order
Terror attacks in Paris, November 13, 2015
- At 9.16pm, three suicide attackers killed one person outside the Atade de France during a foootball match between France and Germany
- At 9.25pm, three attackers opened fire on restaurants and cafes over 20 minutes, killing 39 people
- Shortly after 9.40pm, three other attackers launched a three-hour raid on the Bataclan, in which 1,500 people had gathered to watch a rock concert. In total, 90 people were killed
- Salah Abdeslam, the only survivor of the terrorists, did not directly participate in the attacks, thought to be due to a technical glitch in his suicide vest
- He fled to Belgium and was involved in attacks on Brussels in March 2016. He is serving a life sentence in France
Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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5
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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- A new “core protection” for refugees moving from permanent to a more basic, temporary protection
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- A longer path to settlement with no indefinite settled status until a refugee has spent 20 years in Britain
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The biog
Prefers vegetables and fish to meat and would choose salad over pizza
Walks daily as part of regular exercise routine
France is her favourite country to visit
Has written books and manuals on women’s education, first aid and health for the family
Family: Husband, three sons and a daughter
Fathiya Nadhari's instructions to her children was to give back to the country
The children worked as young volunteers in social, education and health campaigns
Her motto is to never stop working for the country
