OPEC+ adopts plan for 2027 baselines ahead of July output hike talks
LONDON/MOSCOW - OPEC+ agreed on Wednesday to establish a mechanism for setting baselines for its 2027 oil production, while OPEC+ sources said that separate talks on Saturday could agree a further accelerated oil output hike for July.
The group, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, has been discussing new baselines - production levels from which each member makes cuts or increases - for the last few years.
Baselines and quotas are controversial because some members such as the United Arab Emirates and Iraq have increased their production capacity, pressing the case for higher quotas, while others such as African members have seen declines. Angola quit the group in 2024 over a disagreement on its production target.
On Wednesday, the 22-member group tasked OPEC headquarters with developing a mechanism to assess countries' maximum production capacity, to be used as reference for 2027 output baselines for all countries, OPEC+ said in a statement.
OPEC+ pumps about half the world's oil and has agreed three layers of output cuts since 2022 to support the market. Two of these are in place until the end of 2026 and one is currently being unwound by eight members. Wednesday's meeting did not change any of these policies.
On Saturday, eight OPEC+ members who are in the process of gradually raising output are set to meet and may agree an output hike for July of 411,000 barrels per day, the same as in May and June, two delegates said. They declined to be identified by name due to the sensitivity of the matter.
The May and June hikes are faster than originally planned, and have weighed on oil prices. The strategy of group leaders Saudi Arabia and Russia is partly to punish over-producing allies and to win back market share, Reuters has reported.
OPEC+ itself cited "the current healthy market fundamentals, as reflected in the low oil inventories" as its reasoning for the June production decision on May 3.
The 2027 baselines in theory could feature in production policy when all output cuts currently in place expire.
Oil prices fell to a four-year low in April below $60 per barrel after OPEC+ said it was accelerating its output hike in May and as U.S. President Donald Trump's tariffs raised concerns of global economic weakness. Since then it has recovered to about $65.
Earlier this month, sources told Reuters that the eight countries, in addition to an output hike of 411,000 bpd for July, may unwind the remainder of the most recent cut by the end of October.
OPEC itself also met on Wednesday and only discussed administrative matters, a source said. OPEC+ will hold its next meeting on Nov. 30.
(Reporting by Alex Lawler, Ahmad Ghaddar, Olesya Astakhova, Maha El Dahan and Yousef Saba; Editing by Kirsten Donovan and Emelia Sithole-Matarise)
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