# OPEC+ seen sticking to policy despite higher oil demand
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-09-01
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: OPEC+ likely to maintain gradual oil output policy despite
Meta Description: OPEC+ likely to stick to plan despite raised 2022 demand outlook, experts say. Market balance key.
URL: https://financedigest.com/opec-seen-sticking-to-policy-despite-higher-oil-demandhtml

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By Ahmad Ghaddar, Rania El Gamal and Alex Lawler

LONDON/DUBAI (Reuters) -OPEC and its allies will likely stick to their existing policy of gradual oil output increases, four sources said on Wednesday, even though the group revised up its 2022 demand outlook and still faces U.S. pressure to raise production more quickly.

The Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+, holds a full ministerial [meeting online](https://www.financedigest.com/virtual-meetings-the-big-mistakes-that-can-make-online-communications-fail.html "Virtual Meetings – The big mistakes that can make online communications fail") on Wednesday. Before that, a smaller group of ministers will [meet to discuss](https://www.financedigest.com/new-zealand-pm-meets-biden-to-discuss-u-s-indo-pacific-strategy.html "New Zealand PM meets Biden to discuss U.S. Indo-Pacific strategy") the market.

The group agreed in [July to phase out record output](https://www.financedigest.com/toyotas-july-global-vehicle-output-drops-again-puts-annual-target-in-doubt.html "Toyota’s July global vehicle output drops again, puts annual target in doubt") cuts by adding 400,000 barrels per day (bpd) a month to the market.

(OPEC+) will most likely keep the agreement as it was [agreed,” one of the sources said ahead of Wednesday’s talks](https://www.financedigest.com/u-s-ukraine-agree-to-launch-talks-to-upgrade-2008-trade-accord.html "U.S., Ukraine agree to launch talks to upgrade 2008 trade accord").

On Tuesday, OPEC+ experts revised the 2022 [oil demand](https://www.financedigest.com/oil-gains-after-iea-sees-demand-rising-to-record-high.html "Oil gains after IEA sees demand rising to record high") growth forecast to 4.2 million bpd, up from a previous 3.28 million bpd, potentially building the case for higher output in future.

The [outlook for 2022 looks optimistic based on data](https://www.financedigest.com/sterling-holds-firm-after-uk-jobs-data-muddies-rate-outlook.html "Sterling holds firm after UK jobs data muddies rate outlook") for 2021. OPEC+ expects [demand to grow by 5.95 million](https://www.financedigest.com/musk-says-tesla-price-cuts-triggered-demand-2023-sales-could-hit-2-million-vehicles.html "Musk says Tesla price cuts triggered demand, 2023 sales could hit 2 million vehicles") bpd this year after a record drop of about 9 million bpd in 2020 because of the COVID-19 pandemic, but demand only grew by about 3 million bpd in the first half of 2021.

“Demand has disappointed relative to lofty expectations and there are still headwinds, particularly in Asia. We only expect [demand to rise](https://www.financedigest.com/oil-rises-on-demand-hopes-as-banking-crisis-fears-subside.html "Oil rises on demand hopes as banking crisis fears subside") back to 2019 levels in the second half of 2022,” said Amrita Sen, co-founder of Energy Aspects think-tank.

The United States has called for speedier [output increases by OPEC+](https://www.financedigest.com/oil-prices-rise-after-opec-keeps-output-steady-russian-price-cap-imposed.html "Oil prices rise after OPEC+ keeps output steady, Russian price cap imposed") as benchmark Brent crude traded above $72 per barrel, close to multi-year highs. \[O/R\]

Russia’s Deputy Prime Minister Alexander Novak, who handles OPEC+ policy for Moscow, said OPEC+ action to curb output had dealt with the market surplus and said he was convinced [demand would be robust this and next year](https://www.financedigest.com/heathrow-airport-says-return-to-pre-pandemic-demand-years-away.html "Heathrow Airport says return to pre-pandemic demand years away").

Now it is important to maintain this balance and synchronise production and [demand as the market rebounds,”](https://www.financedigest.com/oil-prices-slide-as-hopes-for-china-demand-rebound-fade.html "Oil prices slide as hopes for China demand rebound fade") Novak said told reporters.

The [demand forecast](https://www.financedigest.com/michael-kors-owner-capri-cuts-forecasts-as-demand-slows-shares-plunge-20.html "Michael Kors owner Capri cuts forecasts as demand slows, shares plunge 20%") revision came during the OPEC+ joint technical committee (JTC), which on Tuesday presented an updated report on the state of the oil market in 2021-2022.

On Tuesday, OPEC+ sources said the report, which has not been made public, forecast a 0.9 million bpd deficit this [year as global](https://www.financedigest.com/global-economy-seen-facing-a-challenging-year-eurochambres.html "Global economy seen facing a challenging year -Eurochambres") demand recovers.

The report had initially forecast a surplus of 2.5 million bpd in 2022 but this was later revised to a smaller surplus of 1.6 million bpd [due to stronger demand](https://www.financedigest.com/investments-in-the-caribbean-increasing-due-to-cbi-demand.html "Investments in the Caribbean Increasing Due To CBI Demand"), the sources said.

As a result, commercial [oil inventories](https://www.financedigest.com/oil-falls-from-one-month-high-after-u-s-fuel-inventory-surge.html "Oil falls from one-month high after U.S. fuel inventory surge") in the OECD, a group of mostly developed countries, would remain below the 2015-2019 average until May 2022 rather than the initial forecast for January 2022, the JTC presentation showed, according to the sources.

Rystad Energy’s head of [oil markets Bjornar Tonhaugen said it was not yet clear “whether demand](https://www.financedigest.com/oil-prices-rebound-after-opec-upgrades-china-demand-outlook.html "Oil prices rebound after OPEC upgrades China demand outlook") will be able to grow as quickly as OPEC+ and the market predicts, given the risk of new lockdowns to fight the unresolved COVID-mutant spread.

(Additional reporting by Olesya Astakhova in Moscow; Writing by Dmitry Zhdannikov; Editing by David Goodman and Edmund Blair)


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