OPEC allies agree to gradually increase oil production

OPEC and its allies, including Russia, announced Thursday that they will gradually increase oil production over the next three months.

By accepting modest increases in production, Saudi Arabia appears to have bowed to pressure from Russia and other producers to increase production. They want to take advantage of what they see as a growing global thirst for oil as economies grow slowly after pandemic lockdowns.

The group, known as OPEC Plus, retains 8 million barrels per day on the market.

On the occasion, the Saudis “decided to go with the consensus of the members,” said Helima Croft, a commodities strategist at RBC Capital Markets, an investment bank.

Under the agreement, OPEC Plus will increase production by 350,000 barrels per day in May and June and by 441,000 barrels per day in July. During the same period, Saudi Arabia will gradually reduce the additional 1 million barrels per day reductions it has voluntarily made.

Prince Abdulaziz told a press conference after the meeting that OPEC Plus wanted to test increased production, but would still be able to change plans if demand did not materialize.

“We can freeze; we can increase; we can decrease, ”he said. For now, the oil market has accepted the prospect of increases that would represent less than 1% of global consumption per month.

Larry Goldstein, an oil analyst at the Energy Policy Research Foundation, said the approach to easing cuts was “very modest and conservative” and would tend to support prices over the next few months.

In addition, said Croft, OPEC’s willingness to increase production is seen as a vote of confidence in the global economic recovery. – New York Times Service