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Saudi Arabia and Russia have come to a compromise on oil policy among the world’s largest producers, agreeing to maintain production levels until February and delay any increases until March, according to officials familiar with the oil industry. negotiations.
Futures for West Texas Intermediary, the gauge of U.S. crude, topped $ 50 a barrel for the first time since February last year on the deal, before falling back to $ 49.69, up 4 , 4% over the day. Brent, the international benchmark, rose 3.7% to $ 52.98 per barrel.
After failing to agree on a deal on Monday, the two sides are expected to complete the compromise later on Tuesday, the people said at a scheduled meeting between members of the Petroleum Exporting Countries-led Organization. Saudi Arabia and a contingent of major oil producers.
OPEC met virtually Monday with 10 Russian-led producers, a group that together have been dubbed OPEC-plus, at the first of their monthly meetings to review global oil demand and their production strategy. Last month, they agreed to increase production by 500,000 barrels per day, bringing their net reductions since the start of the pandemic to some 7.2 million barrels per day. The group plans to restore a total of 2 million barrels per day of production in the coming months.
Russia was initially opposed to postponing restrictions from last month and had pushed for a 500,000 barrels per day increase for February, after securing the broader group’s agreement for a similar increase in January. Moscow has argued that demand for oil will return as global immunization programs begin to dent in the pandemic, delegates said.
But Saudi Arabia and most other producers wanted an extension of current production restrictions, said people close to them, concerned about the return of lockdowns and the slow rollout of vaccines. Algeria, for example, has been pushing for them to be kept until the end of March, they said.
A deal, while restricting supply in the short term, would mean a continued willingness from the larger OPEC-plus group to work together to support prices. A Saudi-Russian standoff at the start of last year contributed to a price collapse just as the pandemic was destroying demand. But they quickly agreed to act together to reduce global oil supplies and stabilize prices.
OPEC-plus agreed last year to cut production to a record 9.7 million barrels per day and considered restoring it in 2 million barrels per day increments assuming demand returns. In the summer they decided to return the original 2 million and last month agreed to add an additional 500,000 barrels per day.
Write to Summer Said at [email protected] and Benoit Faucon at [email protected]
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