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Oil Prices Jump As OPEC+ Holds Firm On 400,000 Bpd Production Hike

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Oil prices jumped early on Monday after reports started to emerge that the Joint Ministerial Monitoring Committee (JMMC) of the OPEC+ alliance recommended to the ministers to stick to the current plan and ease the cuts by 400,000 barrels per day (bpd) in November.

As of 9:21 a.m. EDT, just after a very short JMMC meeting ended and ahead of the full ministerial OPEC+ meeting, Brent Crude returned to $80 per barrel it had briefly hit last Tuesday. Brent was trading at $80.80, up by 1.85%.

The U.S. benchmark, WTI Crude, reached its highest level since the 2014 price crashed and traded at a more-than-seven-year high of $77.05, up by 1.75%.

The favored option for the OPEC+ group is to stick to the plan and increase the collective output by 400,000 bpd in November, the JMMC meeting decided, as per sources who spoke to media.

That’s the basic minimum the market was expecting.

OPEC+ decided in the middle of July that it would start returning 400,000 bpd to the market every month beginning in August until it unwinds all the 5.8 million bpd cuts. The group agreed to extend the existing deal from April 2020 through the end of December 2022. 

Recent price strength and expected higher oil demand in the winter due to gas-to-oil switching with record-high natural gas prices in Asia and Europe had some observers and oil-consuming nations, including the U.S., to call on OPEC+ for a higher increase in production.

The JMMC, which recommends preferred action to the ministers, favors the plan as-is: easing the cuts by 400,000 bpd next month.

Earlier reports had indicated that an 800,000-bpd supply increase in November with no increase in December was also on the table.

At the end of the JMMC meeting and just ahead of the ministerial meeting, sources said, as carried by Amena Bakr, Deputy Bureau Chief and Chief Opec Correspondent at Energy Intelligence: “Look past your noses, there’s an oversupply expected in 2022. Easing by the planned 400k is the favored option so far.”

By Tsvetana Paraskova for Oilprice.com

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