A source told Reuters that the monthly increase will be less than 500,000 barrels per day.
An OPEC+ source told Reuters that OPEC+ is gradually adding about 2 million barrels per day (bpd) to the oil market from August to December because the organization has eased production restrictions amid global economic recovery and rising oil prices. .
The source told Reuters that the monthly increase will be less than 500,000 barrels per day. Another OPEC+ source told Reuters that Saudi Arabia, the largest OPEC producer, and Russia, the largest non-OPEC producer, have reached a preliminary agreement to relax production restrictions starting in August.
In response to the destruction of oil demand caused by the COVID-19 crisis, OPEC+ agreed last year to reduce production by nearly 10 million barrels per day starting in May 2020, and plans to phase out the reduction by the end of April 2022. The current production cut is about 5.8 million barrels bpd.
Oil prices continued their upward trend due to the news of the most new production plan, as some traders had expected a greater increase in production in August. As of 13:15 GMT, the trading price of Brent crude oil was US$76.40 per barrel, an increase of more than 2%, close to a two-and-a-half-year high.
UBS analyst Giovanni Staunovo said that the increase outlined “will keep the market tight this summer and demand will continue to increase in the coming weeks”, adding that the consensus is an increase of 500,000 barrels per month or slightly more.
Ministers from the Organization of Petroleum Exporting Countries, Russia and its allies (an organization called OPEC+) began an online meeting on Thursday. Sources told Reuters that they will decide on the policy starting in August and may consider extending their overall supply restriction agreement beyond April 2022.
A source also told Reuters that active supply management may be extended to the end of 2022. OPEC will end the meeting before 13:00 GMT, and the broader OPEC+ meeting will start at 16:30 GMT.
The OPEC+ team said on Tuesday that it expects oil demand to increase by 6 million barrels per day in 2021, but said there is a risk of oversupply in 2022, saying there is “significant uncertainty”, including the imbalance in the global recovery and the increase in cases of the Delta variant of the coronavirus .
Saudi Arabia, Russia, and other OPEC+ member states have been working closely since the plunge in oil prices before the March 2020 pandemic. The collapse in prices drove them to unite again to reach a supply agreement.
However, the group still faces the challenge of how to quickly lift the cuts.
Riyadh is generally cautious about increasing new supplies, which reflects the uncertainty of the pandemic process. Russia’s economy is more diversified and its dependence on oil is lower. Therefore, there is a general concern that high oil prices may stimulate production in the United States, a competitor, which is economically demanding higher prices.