​OPEC+ deal boosts future allocations for UAE, Saudi and Kuwait

GULF COUNTRIES - Report 19 Jul 2021 by Justin Alexander

The new OPEC+ deal implements a 2m b/d taper in cuts over the rest of 2021 and extends producer cooperation until end-2022. It implies further tapering back to baselines by October 2022. In return for its cooperation, the UAE gets a boost in its baseline to 3.5m b/d (a 10.5% increase) for the final 8 months of the deal from May 2022, but smaller increases also went to Kuwait, Saudi Arabia, Russia and Iraq. All together, the total OPEC+ baseline will be 1.6m b/d higher in May 2022. Assuming things play out roughly as OPEC+ plans, the UAE could see a 20.5% y/y increase in production in 2022, with even Oman and Bahrain, whose baselines are unchanged, up by 12%. The oil market is distracted today by broader negative sentiment, including about the Delta variant and so, although aspects of the OPEC+ deal may eventually be bullish, oil is down sharply, by -7% from Friday's close.

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