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DUBAI/LONDON - The Organization of the Petroleum Exporting Countries and its allies will go ahead with a planned oil production increase in December but first need to cut output to address overproduction by some members, two OPEC+ sources said on Thursday.
The sources said the plan didn't represent any major change from existing policy after the Financial Times reported Saudi Arabia is committed to OPEC+ raising production on Dec. 1 and dropping its unofficial $100 a barrel oil price target to win back market share.
OPEC and Saudi Arabia have repeatedly said they do not target a certain price and make decisions based on market fundamentals and in the interest of balancing supply and demand.
The output increase in December is not about regaining market share, it is about a small number of countries phasing out their voluntary output cuts, one of the OPEC+ sources said.
OPEC+, which groups OPEC members and allies such as Russia, is scheduled to raise output by 180,000 barrels per day in December. Iraq and Kazakhstan have pledged to cut 123,000 bpd in September to compensate for earlier pumping above agreed levels.
"When the compensation plan and production figures from those countries becomes clear for September then that will allow the increment to come in as the impact of the increment will be negligible," one of the OPEC+ sources said, referring to the December increase.
The Saudi government's communications office and OPEC's headquarters did not immediately return requests for comment.
OPEC+ is currently cutting output by a total of 5.86 million bpd, equivalent to about 5.7% of global oil demand. Earlier this month, they delayed the plan to boost output after oil prices fell to a nine-month low.
Global crude benchmark Brent was down about 2.5% to below $72 a barrel at 1420 GMT.
A panel of top ministers from OPEC+ called the Joint Ministerial Monitoring Committee is scheduled to meet on Oct. 2 to review the market and is not expected to make any changes to policy.
Russian Deputy Prime Minister Alexander Novak told Reuters on Thursday that there were no changes to OPEC+ plans to start phasing out oil production cuts from December.
Russian Deputy Energy Minister Pavel Sorokin said that Russia does not want to flood the market with oil when speaking about plans to raise country's output to 540 million tons from 2030.
The cuts by Iraq and Kazakhstan are so-called compensation cuts that the countries have pledged to make up for earlier pumping above quotas. More such cuts are pledged in later months this year and into 2025.
OPEC+ ministers could meet again in November, a third OPEC+ source said.
(Reporting by Maha El Daha, Olesya Astakhova, Vladimir Soldatkin and Alex Lawler; Additional reporting by Yousef Saba, Editing by Dmitry Zhdannikov, Kirsten Donovan and Sharon Singleton)