By Maha El Dahan, Olesya Astakhova and Alex Lawler
DUBAI/LONDON (Reuters) -The Organization of the Petroleum Exporting Countries and its allies will go ahead with a planned increase in oil output in December but must first cut production to tackle overproduction by some members, two OPEC+ sources said Thursday.
The sources said the plan did not represent a major change from existing policy after the Financial Times reported that Saudi Arabia committed to raising OPEC+ output on December 1 and dropping its unofficial oil price target of $100 per barrel to regain market share.
OPEC and Saudi Arabia have repeatedly said that they do not target a particular price and that they do not make decisions based on market fundamentals and in the interest of balancing supply and demand.
The December production increase is not about regaining market share, but about a small number of countries phasing out their voluntary production cuts, one of the OPEC+ sources said.
OPEC+, which brings together OPEC members and allies such as Russia, will increase production by 180,000 barrels per day in December. Iraq and Kazakhstan have pledged to cut barrels per day by 123,000 barrels per day in September to compensate for previous pumping above agreed levels.
“When the compensation plan and production figures of those countries for September become clear, that will allow the increase to come in, as the impact of the increase will be negligible,” one of the OPEC+ sources said, referring to the December increase .
The Saudi government communications office and OPEC headquarters did not immediately return requests for comment.
OPEC+ is currently cutting production by a total of 5.86 million barrels per day, equivalent to about 5.7% of global oil demand. Earlier this month, they postponed their plan to boost production after oil prices fell to their lowest level in nine months.
The global benchmark crude fell about 2.5% to below $72 a barrel at 1420 GMT.
A panel of top OPEC+ ministers called the Joint Ministerial Monitoring Committee will meet on October 2 to assess the market and is not expected to make any policy changes.
Russian Deputy Prime Minister Alexander Novak told Reuters on Thursday that there were no changes to OPEC+ plans to start phasing out oil production from December.
Russian Deputy Energy Minister Pavel Sorokin said Russia does not want to flood the market with oil as he talks about plans to increase the country’s production to 540 million tons from 2030.
The cuts by Iraq and Kazakhstan are so-called compensation cuts, which the countries have promised will make up for the previous quota exceedance. More such cuts are promised in the later months of this year and in 2025.
OPEC+ ministers could meet again in November, a third OPEC+ source said.
