Opec+ agrees to gradually increase production

08 April 2021

The 15th OPEC+ Ministerial Meeting has announced that the members of the group would gradually increase oil production over the next three months. 

Under the agreement, Opec+, which includes Russia, will increase output by 350,000 barrels a day in both May and June and by 441,000 barrels a day in July. Over the same period, Saudi Arabia will gradually unwind additional cuts of 1 million barrels a day that it has been making voluntarily, reports said.

It's estimated that Opec+ has been withholding 8 million barrels a day from the market.

Reports said Russia and some other producers are eager to raise output to take advantage of a likely growing global thirst for oil.

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

Prince Abdulaziz said during a news conference after the meeting that Opec+ wanted to test out increased production but would still be able to change plans if demand failed to materialise.

“We can freeze; we can increase; we can decrease,” he said.

For now, the oil market has accepted the prospect of increases that would amount to less than 1% of global consumption per month.

Opec’s willingness to increase output is seen as a vote of confidence in the global economic recovery, said Croft.