OPEC+ Sticks to Gradual Oil Output Increase Plan, Replaces US Energy Agency
OPEC+ Agrees to Stick to Gradual Output Hike
OPEC+ agreed to stick to its policy of gradually raising oil output from April, removing the US government’s Energy Information Administration (EIA) from the sources used to monitor its production and adherence to supply pacts.
OPEC+ and US: A History of Tensions
OPEC+ and Donald Trump clashed repeatedly during his first administration in 2016-2020 when the US President demanded it raise production to compensate for the drop in Iranian supply, which resulted from US sanctions. Trump has already called on OPEC to release more oil to bring down prices, saying elevated prices have helped Russia continue the war in Ukraine.
OPEC+ Meeting
At an online meeting on Monday, a group of top OPEC+ ministers made no change to the output hike plan and changed the list of consultants and other firms it uses to monitor its production, known as secondary sources.
Changes in Secondary Sources
"After thorough analysis from the OPEC Secretariat, the Committee replaced Rystad Energy and the Energy Information Administration (EIA) with Kpler, OilX, and ESAI, as part of the secondary sources used to assess the crude oil production and conformity," they said in a statement.
Reason for EIA Removal
One OPEC+ source said that the removal of EIA data was because the agency was not providing communication on the information required and was not driven by politics. The US government did not immediately respond to a request for comment.
Global Market Impact
The meeting comes after Trump imposed tariffs on Mexico, Canada, and China, America’s top trading partners, in a move that roiled financial markets and gave oil prices some support. Concern about the impact of US sanctions on Russia pushed oil prices to US$83 a barrel on January 15, the highest since August. Prices have since slipped below US$77, although they were up on Monday as the tariffs raised concerns over supply disruption.
OPEC+ Production Cuts
The Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+, is cutting output by 5.85 million barrels per day (bpd), equal to about 5.7 per cent of global supply, agreed in a series of steps since 2022. In December, OPEC+ extended its latest layer of cuts through the first quarter of 2025, pushing back a plan to begin raising output to April.
Conclusion
OPEC+ has decided to stick to its plan to gradually raise oil output from April, replacing the US Energy Information Administration with new secondary sources. The move is seen as a sign of the group’s commitment to managing the global oil market and maintaining supply and demand balance.
Frequently Asked Questions
Q: Why did OPEC+ remove the US Energy Information Administration from its secondary sources?
A: OPEC+ removed the EIA due to lack of communication on required information and not driven by politics.
Q: What is the current output cut plan of OPEC+?
A: OPEC+ is cutting output by 5.85 million barrels per day (bpd), equal to about 5.7 per cent of global supply.
Q: When will OPEC+ start raising output?
A: OPEC+ plans to start raising output in April with a monthly rise of 138,000 bpd until September 2026.
