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OPEC+ is currently facing a credibility issue. It has created its own negative image in the oil markets globally with its faulty monthly figures of increased production. In reality, the figures have been missing the target throughout the past year, as it misses its volume increase by millions of barrels. In other words, the oil organization does not adhere to its monthly commitment, but wants the oil consumers to believe otherwise. They have been keeping the oil reporters quiet, as they will otherwise be boycotted, like they did recently with the International Energy Agency (IEA).
It has been bragging about being compliant by more than 150 percent – something that it should be ashamed of – since the time of introduction of the volume increase mechanism. Its members were happy about the adherence level, not realizing that it was all a big joke.
With every monthly increase, the markets realize lesser volumes are being produced, and this continues without announcing or saying that OPEC+ neither has the volume nor can pass on or allow other members to produce more than the agreed quota.
Why is OPEC+ not telling the truth in order to avoid the embarrassment and lose its credibility? It should declare the truth by stating that we have reached our maximum capacity, and no more oil is available. OPEC+ produced less than 1.3 million barrels in March, of which Russia produced 300,000 barrels for the second month in a row. The remaining shortages came from various countries including West Africa and Malaysia. Next month, the reduction will be more than last month, with Russia falling in production because of the EU boycott.
The oil organization will be stating more increase in production for the month of May but many, if not most, of the OPEC+ members will struggle to produce more oil or even meet their own quotas. In fact, they have been failing in this since the first month of crude oil restriction. OPEC+ should come out openly and clearly, and stop sending wrong messages of the volumes. It has a responsibility towards its global consumers. The oil organization must respect its customers and should be honest and frank about its monthly increased production volume. It should be embarrassed about its declared compliance rates of 132 percent, 140 percent and 157 percent. It must put an end to this. As my country is a founding member of OPEC, it is certainly not happy with the current practices of the organization, which is avoiding to tell the bare truth about its inability to produce more oil. OPEC+ has lost its reliability and credibility. It has brought upon itself the title of “Cheat+”.
By Kamel Al-Harami
Independent Oil Analyst