OPEC Watch: Most relevant developments (AEGIS Reference)

April 1, 2021
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OPEC reaches consensus to ease oil output cuts

(Apr. 1, 2021) On Apr 1, OPEC+ agreed to increase oil output gradually. According to delegates, the cartel will raise its production by 350 MMBbl/d in both May and June and then increase by 440 in July. Saudi Arabia may also roll back some of its 1 MMBbl/d compensatory cuts over the same period in monthly increments of 250 MBbl/d beginning in May. In total the cartel will add 2 MMBbl/d in supply to the market from May to June. According to OPEC analysis, the group is expecting global inventories to reach their five-year average by the end of June and fall 35 MMBbl/d below the benchmark by July – even with the group raising production by 1.4 MMBbl/d during that time frame.

Read more at WSJ. 

While many analysts were expecting the cartel to keep output steady for at least another month, prices remained firm in response to the news. The cautious move by the group reaffirms the notion that they are focusing on keeping prices in the $55 – $65/Bbl range and reducing inventories to “normal levels” at a steady pace. Further reassurance came out of the meeting, with the Kingdom highlighting the importance of keeping its finger on the pulse of the oil markets, to prevent overheating. The next meeting is scheduled for April 28, 2021.

Source: AEGIS, WSJ

Tensions rise after Houthi missiles hit important Saudi Arabian oil infrastructure

(Mar. 8, 2021) On Sunday March 7, Saudi Arabia was attacked by missiles and drones that briefly sent oil prices higher.

The attacks were claimed by Iran-backed Houthi rebels, according to Bloomberg. The initial scare and possible threat to supply resulted in Brent crude reaching $71.37/Bbl and WTI touching nearly $68.

Explosions rocked the city of Dhahran, Saudi Arabia, where Aramco is headquartered, according to witnesses. The Saudi Energy Ministry said key oil infrastructure at Ras Tanura was hit during the attack, but that its facilities and oil output was unaffected. Loadings in the Ras Tanura area were continuing on Monday, according to the Ministry.

Oil prices have given back attack-related gains as of 7:00 AM Houston time on Monday.

Read more at Bloomberg. 


The Persian Gulf side of Saudi Arabia is home to the Ras Tanura terminal – the world’s largest oil export port. There are two large oil tank farms, a refinery, and multiple deep water ports in the Ras Tanura area. The terminal is capable of exporting about 6.5 MMBbl/d, according to Bloomberg.

This attack doesn’t look to have caused a production disruption this time. Different Saudi oil infrastructure came under fire in September 2019, cutting production for about a month.  Saudi Arabia is one of the world’s largest oil producers and attacks that disrupt production can and has led to higher oil prices.

Source: AEGIS, Bloomberg

OPEC and its participating guest countries (collectively, OPEC+) remains a major force in determining oil prices. With the inclusion of Russia, the group accounts for almost half the world’s potential supply. 

Below, we keep a running list on OPEC developments and online resources. This effort began in February 2021, so items before that date may not be included, even if they are relevant for understanding the current situation. 

Recent developments and items to watch:

  • OPEC+ will keep March production levels through April (March 4)
  • Saudi Arabia will maintain its output in April, too (March 4)
  • WTI rallied over $3 on the above news (March 4)
  • The market consensus was an expected +500 MBbl/d increase from OPEC+ and the return of 1 MMBbl/d from the Saudis
  • Russia received a 130 MBbl/d exemption, starting in April (March 4)
  • Next full OPEC+ meeting April 7
Many demand forecasts expect 4Q2019 levels won’t be reached until 2022
OPEC’s demand outlook
OPEC has been withholding production to balance markets and manage prices. This supply should return as OPEC believes the timing to be right.

The chart above summarizes global supply and demand estimates from OPEC, with supplementary information from EIA. These forecasts would expect demand to only allow OPEC to bring some of its withheld production back into market by year-end. That is, without creating an oversupplied market.

OPEC+ surprises the market with unchanged production quotas for April

(Mar. 4, 2021) The market likely expected Saudi Arabia to return its latest 1 MMBbl/d of production cuts, and the balance of OPEC+ to increase production modestly, in the full OPEC+ meeting held March 4. However, the group elected to keep total output almost unchanged.

Russia received a small exemption of 130 MBbl/d, to start in April.

Oil prices lurched higher, gaining 5% on the day. Prompt-month WTI climbed to its highest level since April 2019.

Read more at WSJ. 


AEGIS notes Saudi Arabia continues to make the largest investment, voluntarily withholding additional barrels to keep the market undersupplied and prices supported. One has to wonder if the Saudis see those additional cuts as necessary to hold together the supply-cut deal for longer.

Global storage levels are likely depleting near 1 MMBbl/d, and the continued destocking would imply backwardation in the oil curves and support for prices. Yet, we recognize that as global demand becomes more certain, OPEC+ has around 7 MMBbl/d of spare capacity that could be brought back.

Additional links: 

Saudi Arabia Teases Output Increases As Brent Nears $65

OPEC+ may consider a 500 MBbl/d production increase at March 4 meeting

(Feb. 24, 2021) Some members consider current pricing to be too high, the market needing supply. Reuters reports a “modest” increase in production will be considered.

The group will look at updated supply and demand figures, for possible action in April.

Official figures have OPEC+ withholding just over 7 MMBbl/d in February. That number includes a short-term action taken by Saudi Arabia to cut its own production by another 1 MMBbl/d through March.

Read more here at Reuters. 


OPEC+ must measure the global supply-demand balance carefully to bring an appropriate level of supply back.

Additional links: 

Saudi Arabia Teases Output Increases As Brent Nears $65

Saudi Arabia Teases Output Increases As Brent Nears $65

(Feb. 17 , 2021) Saudi Arabia plans to unwind 1 MMBbl/d of supply cuts starting in April.* The action would end the 1 MMBbl/d of unilateral curtailments the country announced in early January for February and March. Since January 5, global oil prices have risen over 25% to $64.34/Bbl (through February 17).


OPEC+ must measure the global supply-demand balance carefully to bring an appropriate level of supply back.

Additional links: 


Full AEGIS discussion, including supply-demand and curve structure changes. 

Questions or comments? Please contact us: [email protected].

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