By ALEX LAWLER, OLESYA ASTAKHOVA AND AHMAD GHADDAR
LONDON — OPEC+ oil producers are set to approve another big output boost for September as they complete the unwinding of voluntary output cuts by eight members and allow the United Arab Emirates to pump more to meet a larger quota, five sources said.
Plans to unwind cuts of 2.17 million barrels per day (bpd) began in April with a boost of 138,000 bpd. Hike of 411,000 bpd followed for May, June and July, despite falling oil prices.
On Saturday, the group approved a 548,000 bpd jump for August.
Five sources familiar with the discussions said on Monday the group is likely to approve an increase of around 550,000 bpd for September when it meets on August 3.
That will complete the planned return of 2.17 million bpd to the market from the eight members: Saudi Arabia, Russia, the UAE, Kuwait, Oman, Iraq, Kazakhstan and Algeria.
It will also allow room for an additional 300,000 bpd in output from the UAE as it moves to a larger production quota, the sources said.
Meanwhile, Saudi Arabia, the world’s biggest oil exporter, on Sunday hiked August prices for Asian and European buyers by more than $1 a barrel as domestic crude demand is expected to rise, reducing exports, and consumption from China is likely to increase.
State energy firm Saudi Aramco raised the official selling price for its flagship Arab light crude to Asia loading in August to $2.20 a barrel above the Oman/Dubai average, the highest in four month and $1 up from July. The price hike exceeded expectations of 50-80 cents a barrel in a Reuters survey early last week.
The Gulf kingdom also increased the prices for all crude grades it sells to refiners in Northwest Europe and the Mediterranean by $1.40 a barrel from the previous month.
Aramco’s price hikes came a day after eight OPEC+ members agreed to raise production by 548,000 barrels per day in August, higher than the 411,000 bpd expected by the market, further accelerating output increases.
The prices reflect higher crude demand in Saudi Arabia to meet peak summer power demand while buying appetite from Chinese refineries is strong as some of them lifted less volumes in previous months, two refining sources in Asia said.
Analysts are expecting Saudi to burn more crude oil this summer for power generation, limiting exports.
The OSPs for Asian supplies were expected to rise for August as the premium of benchmark cash Dubai to swaps averaged $1.88 a barrel in June, up 61 cents from the May average.
The conflict between Iran and Israel last month boosted Middle East crude prices on fears of supply disruptions, increasing volatility in the market.
Cash Dubai’s premium to swaps jumped to a near four-month peak of $3.34 on June 19 before closing the month at $2.73.
