Opec's economic and technical think thank, the Economic Commission Board (ECB), met on 23-24 November to discuss the looming stock release after the US announced plans to offer long-term loans of up to 32mn bl of sour crude from its Strategic Petroleum Reserve (SPR) for delivery by 30 April and to sell another 18mn bl of SPR crude outright over the next "several months". Five other countries committed to join the US in its attempt to lower fuel prices, but the exact scale and timing of the co-ordinated stock release are unclear.
India said it plans to release 5mn bl from its strategic stocks at an unspecified time, while the UK said it has authorised private companies to voluntarily release 1.5mn bl. South Korea and Japan have confirmed their participation but have yet to say how much they plan to release or when, while China has said it will release crude "in light of its own needs".
The ECB considered the possibility that the tally could reach 66mn bl in January-February, although one Opec source said this likely constitutes a "worst case" scenario. The ECB estimates that if 66mn bl is released it will increase the surplus in the global oil market by 1.1mn b/d to 2.3mn b/d in January and 3.7mn b/d in February, according to delegates.
The wider Opec+ group will have chance to consider the implications when it meets next week. The group's Joint Technical Committee (JTC) and Joint Ministerial Monitoring Committee (JMMC) are set to meet on 29 November and 30 November. Opec ministers will gather separately on 1 December before meeting their non-Opec counterparts on 2 December to make a decision on January output quotas.
Several Opec+ delegates have told Argus that they see no need for the group to deviate from its roadmap to gradually restore the production it removed from the market last year in monthly 400,000 b/d increments. But the deal does allow for the possibility of a three-month pause if market conditions warrant it. Over the past 24 hours, both Kuwait and the UAE have issued statements saying they have yet to formulate their positions, while the Iraqi oil ministry said the co-ordinated stock release is unlikely to have a significant effect in the short term.
Several Opec+ ministers had already flagged the potential for seasonal stockbuilds in the first quarter of next year, and this supported the coalition's decision to dismiss calls from the US and others to hike output at a faster pace. Opec secretary-general Mohammed Barkindo today reiterated that a global supply surplus could materialise sooner than expected in the first and second quarters of 2022, adding that Opec+ deal participants will be monitoring "developments related to the release of oil from strategic reserves by certain countries".