OPEC+ boosts oil output as crude rices surgeEuropost
OPEC oil cartel plus the allied producing countries announced plans to increase output to 2.1 million barrels per day of crude production, AP reported. The decision offsets the fears that Covid-19 cases increase in some countries will shrink demand against surging energy needs in recovering economies. Energy ministers agreed the decision during an online meeting.
Saudi Energy Minister Prince Abdulaziz bin Salman said recent market developments proved the agreement to gradually increase production, made in April and reconfirmed this week, was “the right decision.” There are still “clouds on the horizon” regarding the recovery and demand for energy, he said.
The cartel decided to keep the course from earlier meetings and to raise production by 2.1 million barrels per day from May to July. The group plans to add back 350,000 barrels per day in June and 440,000 barrels per day in July. Saudi Arabia is also gradually adding back 1 million barrels in voluntary cuts it made above and beyond its group commitment. The combined OPEC Plus grouping of members led by Saudi Arabia and non-members, chief among them Russia, is facing concerns that renewed Covid-19 outbreaks in countries such as India, a major oil consumer, will hurt global demand and weigh on prices. Oil producing countries made drastic cuts to support prices during the worst of the pandemic slowdown in 2020 and must now judge how much additional oil the market needs as producers slowly add more production.
But prices have recovered, closing at multi-year highs, and the recoveries in the US, Europe and Asia are expected to drive energy demand higher in the second half of the year as people travel more and use more fuel. The US driving season began over Memorial Day weekend and increasing numbers of Americans have been vaccinated, leaving people feeling freer to travel and take longer trips by car. Oil prices have risen more than 30% since the start of the year.