OPEC + is set to agree a production increase this week as it seeks to accelerate the rapid accumulation of raw crude prices.
There is a widespread perception within the organization that the market may include additional barrels, according to people familiar with the negotiations. As long as the usual differences are present – with Saudi Arabia cautious and Russia willing to open the taps – both sides are ready to boost production, they said, wanting not to be named because the information was private.
That could set the group on track to implement most of the 1.5 million-barrel-a-day yield increase up for Thursday’s debate.
An agreement to roll out OPEC + supply is the latest sign that the global economy is recovering from the damage done by the coronavirus pandemic. The cartel has suffered a year of pain, under the control of the deepest product cuts in its history. But the sacrifice has paid off, restoring oil prices back to pre-crisis levels above $ 60 a barrel.
“Both the global economic outlook and the oil market prospects are showing signs of continued development,” OPEC Secretary-General Mohammad Barkindo said at the opening of a meeting of the group’s technical experts on Tuesday. uncertainty that surprised and disturbed the market last year. years still to stop. “
Brent crude fell in London for a quarter-straight session on Tuesday, falling 1.6% to $ 62.70 a barrel. The global oil standard was still more than 20% higher for the year.
There are two specific elements in the production boost that the Organization of the Petroleum Exporting Countries will be discussing this week.
First, will the cartel go ahead with a collection yield hike of 500,000 barrels a day in April? Second, how will Saudi Arabia offset the additional supply reduction of 1 million barrels per day that it has voluntarily made in February and March?
Strong demand
Russia has been the most consistent proponent of the increase of 500,000 barrels a day, and other members now largely agree that it should go ahead, according to people familiar with the issue.
The chief oil official from the United Arab Emirates, which has also supported a rise in output at recent OPEC + meetings, issued a bullish assessment of the market on Tuesday.
“Oil demand is strong,” said Sultan Al Jaber, chief executive of Abu Dhabi National Oil Company, at the IHS Markit Ltd. CERAWeek prestigious conference. . “
Adnoc has already announced that they are preparing to open the taps, satisfying customers larger quantities of Murban, Das and Upper Zakum barks for April compared to March.
Saudi choice
Saudi Arabia has always said that its reduction in voluntary supply would only last two months, but quarterly OPEC observers have suggested that Riyadh could be phased out.
The kingdom will begin to reverse further cuts as expected in April, but it is still debating internally whether all barrels should be returned in one month, or over time further, people familiar with the conversations said. The decision takes into account the commissioning of the Jizan furnace 400,000 barrels per day, which could affect both domestic and export crude consumption, they said.
At CERAWeek, Saudi Aramco CEO Amin Nasser hit a tone more cautious than his UAE counterpart, predicting strong demand in the second half of 2021, and returning to pre-Covid spending next year.
Whatever the Saudis decide, the global oil market is poised to get the biggest supply boost since August, when OPEC + first began the process of cutting down the 9.7 million-barrel cut- in the day agreed in April last year as a pandemic crushed application.
The group seems to think that the market is ready for it. Even if OPEC + boosts production by 2.4 million barrels per day between February and June – the maximum amount allowed under the current contract – it will still be able to handle the remaining 2020 supply glut cleared before August, secretarial analysts predicted Tuesday. .
This story was published from a wire group group with no text changes. Only the headline has changed.