An Oily Debate: OPEC+ is currently debating whether to increase or halt oil production as price recovers
OPEC and its allies, who make up OPEC+ will meet later today by 1 pm London time to decide whether to keep April’s output steady or increase it as they weigh a recent price rally against uncertainty about the economic recovery.
With oil above $60 a barrel, some analysts have predicted the OPEC+ group of producers will increase output by about 500,000 barrels per day (BPD) and also expect Saudi Arabia to partially or fully end its voluntary reduction of 1 million BPD.
However, some members of the Organization of the Petroleum Exporting Countries (OPEC) believe OPEC and its allies- OPEC+, should keep output unchanged as it was not immediately clear whether Saudi Arabia would end its voluntary cuts or extend them.
OPEC+, whose ministers starts a meeting at 13:00 GMT, have to determine whether an oil price surge from about $52 at the start of the year to more than $67 in late February warrants a production hike or whether the coronavirus crisis could deliver yet another blow to the global economy and demand for fuel.
Russia, on one hand, has been insisting on increasing production to avoid a spike in price any further and also lend its support to shale oil output from the United States, which is not part of OPEC+.
But in February Moscow, the capital city of Russia, failed to raise output, despite being allowed to do so by OPEC+, because harsh winter weather hit its production at mature fields.
OPEC+ cut output by a record 9.7 million BPD last year as demand collapsed due to the pandemic. As of March, it is still withholding 7.125 million BPD, about 7% of world demand. The voluntary Saudi cut brings the total withheld to 8.125 million BPD.
Some analysts, said earlier today, that the market can easily absorb an increase of 1.0 million-1.5 million BPD from April and would need even more barrels in the second half of 2021 when the economy recovers further from pandemic.
What do you think? Increase output or maintain the production cut?
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