OPEC and an alliance of other top oil producers agreed to boost their collective production by more than two million barrels a day over coming months; betting on resurgent demand as they and the rest of the world assess the economic consequences of the pandemic’s trajectory.
The Organization of the Petroleum Exporting Countries and a group of other big producers led by Russia; agreed to boost output in May by 350,000 barrels a day, and by the same amount again in June, according to delegates.
They agreed to then increase output by another 450,000 barrels a day in July.
Saudi Arabia, meanwhile, agreed to start easing separate; unilateral cuts of one million barrels a day that it put in place earlier this year.
It plans to end those cuts altogether by the end of July, delegates said.
The agreement Thursday between the two groups, together called OPEC+, was a compromise between Saudi Arabia; OPEC’s de facto leader, and Russia.
Saudi Arabia had sought to maintain cuts, skeptical of a quick return in oil demand during the pandemic.
Russia, meanwhile, has said the world already needs more oil to feed resurgent economies in many regions.
The decision is another sharp swerve in OPEC’s zigzag oil strategy over the past year, underscoring the difficulty among forecasters in the group;—and elsewhere—to call the start of a sustained global recovery from the pandemic.
The divide was on display ahead of Thursday’s meeting.
Saudi Energy Minister Abdulaziz bin Salman warned the “sea remains rough” in terms of stabilizing the oil market.
Russian Energy Minister Alexander Novak said the oil markets were undersupplied by some two million barrels a day; and “it’s important not to let the market overheat.”
Keeping a tight lid on output can bolster prices, but it can also suppress revenues for many of Russia’s independent producers.
Oil supply lines were also recently disrupted by the six-day closure of the Suez Canal; offering another case for easing the taps.
Many forecasters are bracing for a strong global recovery this year, but it remains an uncertain picture.
Oxford Economics forecast 6% global growth in 2021, the fastest rate in almost half a century; as Covid-19 vaccine campaigns allow pandemic restrictions to be lifted and businesses to snap back in some places.
In China, consumer spending at home and demand for Chinese-made goods abroad added economic steam there in March.