OPEC+ countries have decided to gradually increase oil production. The agency said the process will begin in May. Bloomberg Refer to the participants of OPEC+ conference.
At the beginning of the meeting, most OPEC+ member states agreed to maintain the current production level for one or two months, but then Saudi Arabia made a proposal to increase OPEC+ production by 350,000 barrels per day on May and 20 . In June, an additional 250,000 barrels/day of production was increased in May and June, thereby reducing the voluntary production cut of 1 million barrels/day implemented in February.
The source said that Russia supports the gradual increase in production “Interfax”.
Ministers are currently discussing the details of increasing production.
In March, OPEC+ member states decided not to increase oil production by 400 million barrels per day. However, the decision does not apply to Russia and Kazakhstan, which may increase production by 130,000 barrels/day and 20,000 barrels/day, respectively.
On Thursday, oil prices continued to rise due to expectations of the outcome of the OPEC+ ministerial meeting, where the May oil production quota was discussed. By 17:41 Moscow time, the June Brent crude oil futures price on the London ICE Futures Exchange rose by US$0.15 (0.24%) to US$62.89 per barrel. By this time, the price of May WTI futures on the New York Mercantile Exchange (NYMEX) had risen by US$0.18 (0.3%) to US$59.34 per barrel.
OPEC Secretary-General Mohamed Bagindo said on Wednesday that despite the positive factors, including a large number of COVID-19 vaccinations in the world and budget incentives, the economic environment is still “problematic, complex and uncertain.”
Analysts at ANZ Bank pointed out that the rising incidence of the coronavirus in Europe has exacerbated the uncertainty of oil demand, which may force OPEC+ to maintain production cuts.
S&P Global Platts said: “Yesterday, France announced another four-week embargo, while Italy extended the quarantine measures. This delayed the recovery of demand and maintained the spot market. Oversupply.”
Wood Mackenzie analyst Ann-Louise Hittle pointed out that the oil market is currently well supplied, but the current quarter situation may change. She told MarketWatch: “We expect demand to exceed supply. OPEC+’s decision to keep production in May almost unchanged from April will accelerate rebalancing.”
In March, Brent crude oil prices fell by 3.9% and WTI fell by 3.8%. However, in the first quarter of 2021, contract prices rose by 23% and 22%, respectively.