OPEC Group, Allies Agree To Continue Planned Crude Output Increases

The OPEC group of oil-producing countries and its allies agreed on Tuesday (Jun 1) to maintain planned production increases, as pandemic-hit demand for crude recovers.

The 23-nation OPEC+ alliance implemented sharp output cuts to support prices after the coronavirus pandemic crushed the global economy last year.

But since early May the cartel has started implementing more generous production increases as oil prices have recovered and the health situation improves in developed economies.

At the end of a short meeting on Tuesday which lasted barely half an hour, the group agreed to continue rises up until July adding up to 1.2 million barrels per day (bpd), to which will be added a further million bpd which had been voluntarily withdrawn by Saudi Arabia.

However, the alliance took no decision on what policy to follow from August onwards, and did not discuss the possibility of Iranian oil returning to the market in the coming months.

Among OPEC’s allies, Russia has in recent times pushed for faster rises in output with traditional OPEC kingpin Saudi Arabia supporting a much more cautious approach.

For his part Russian Deputy Prime Minister Alexander Novak said: “We see that demand has increased, that prices have stabilised,” and spoke of a “normalisation” of the global economy.

OPEC has remained optimistic in its predictions for 2021, expecting demand to reach 96.5 million bpd, an increase of six million on 2020 levels.

World oil prices continued their recent upward trend on news of the OPEC+ decision, with the European Brent and US WTI benchmark contracts rising by around two percent at 1600 GMT on Tuesday, with WTI reaching levels unseen since October 2018.