OPEC + sticks to plan to gradually increase oil production, prices skyrocket
- Oil prices soar more than 50% in 2021
- Demand rebounded, supply struggled to keep up
- US official says oil market is “worrying”
- OPEC + wary of any new wave of coronavirus, source says
- Novak says demand tends to slow in Q4
LONDON, Oct. 4 (Reuters) – OPEC + said on Monday it would stick to an existing pact for a gradual increase in oil production, sending crude prices to three-year highs and adding to inflationary pressures that consumer countries fear will derail an economic recovery from the pandemic.
The Organization of the Petroleum Exporting Countries Russia and their allies, known as OPEC +, have faced calls from large consumers, such as the United States and India, for additional supplies after oil prices have increased by more than 50% this year.
OPEC + “reconfirmed the production adjustment plan,” the group said in a statement released after ministerial talks online, referring to a previously reached deal whereby 400,000 barrels per day (bpd) would be added in November,
Brent crude climbed above $ 81 a barrel after learning the group would maintain its plan for incremental incremental production, rather than offering more supply to the market.
“We will monitor the situation, as we know demand generally falls in the fourth quarter,” Russian Deputy Prime Minister Alexander Novak said after the talks, adding that he believed the market was now balanced.
An OPEC + source told Reuters shortly before ministerial talks on Monday that the group had come under pressure to increase production faster, but added: “We are afraid of the fourth corona wave; no one is wants to make big moves. “
The group agreed in July to increase production by 400,000 b / d per month until at least April 2022 to phase out 5.8 million b / d of existing production cuts – already very small compared to the huge restrictions that were in place at the worst of the pandemic.
Demand rebounded quickly, while supply was disrupted by factors such as hurricanes that hit U.S. production and low levels of investment in the industry at the height of the pandemic when demand crunched.
A senior official for US President Joe Biden met with Saudi Crown Prince Mohammed bin Salman in Saudi Arabia on a range of issues last week, saying the oil was “of concern.” India, another big consumer of oil, has pushed to increase supply. Read more
“The outcome of the OPEC + meeting came as no surprise, but when prices rise above $ 80 a barrel of Brent, it’s a level that makes customers uncomfortable and producers happy but cautious, âwrote consulting firm Rystad Energy.
Analysts had said they expected uncertainty over the demand impact of the coronavirus variants, which threaten further economic disruption, to weigh on OPEC + decision-making.
Reporting by Alex Lawler and Ahmad Ghaddar in London, Vladimir Soldatkin and Olesya Astakhova in Moscow; written by Edmund Blair; edited by Veronica Brown and Mark Heinrich
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