The impact of Russian sanctions will be the biggest influence on the supply ‘call’ for OPEC in 2023, according to S&P Global Commodity Insights.

One potential complication to deeper OPEC+ cuts, later in 2023, will come from ambiguity over the timing of a planned shift to higher production baselines, Paul Sheldon, chief geopolitical advisor, analytics, S&P Global Commodity Insights said in a statement.

He added that shifting each country’s entire quota to the new baselines will create a one-time increase for the UAE, in particular, but even for Saudi Arabia, Russia, Kuwait, and Iraq.

However, a shift to the new baselines was not applied when OPEC+ extended the deal through December 2023 on Oct. 5.

If the methodology eventually applies, the largest impact will be on the UAE, which insisted on increasing its disproportionately low quota before agreeing to the July 2021 extension.

“We estimate that under our assumed one million barrels per day (bpd) OPEC+ headline cut for second half of 2023, applying the higher baseline will increase the UAE quota by 110,000 bpd [barrels per day] over its current pledge.”

Thus, moving to the new baselines will reduce the odds of UAE objections, Sheldon said, but could potentially create further complications within OPEC+ policymaking.

S&P Global Commodity Insights estimated that a one million bpd headline cut for first half 2023 will reduce actual supply by 450,000 bpd, due to capacity constraints in most OPEC+ members.

If OPEC+ shifts all country-level quotas to new baselines established in July 2021, which appears unlikely for now, the actual supply reduction from a one million bpd cut would be just 290,000 bpd, Sheldon noted.