For the moment, signatories have approved a plan for a “gradual” rise in production levels over three months.
“To break it down in figures, in May the overall production increase by OPEC+ countries will total 350,000 barrels per day, with the same amount in June and in July 441,000 bpd,” said Deputy Russian Prime Minister Alexander Novak. “OPEC+ countries will work according to the overall timetable called for in the agreement signed in April 2020.”
Russia will increase production by 116,000 bpd over the three months: by 39,000 bpd in May and by a further 39,000 and 38,000 bpd in June and July, respectively. Kazakhstan, for its part, will increase production by 6,000 bpd each month.
Novak said world oil markets will reflect shortages.
“The deficit on market totals about 2 million bpd at the moment and that will allow for stocks to decline,” Novak said. “The decline right now has reached significant levels. The excess over and above the five-year level now amounts to no more than 50-60 million barrels.”
And oil demand continues to rise quite rapidly.
“We are also seeing that the economy is continuing its recovery,” Novak said. “Leading economists are anticipating growth in the world economy of more than 5 % and that, In turn, will have an effect on growth in demand for oil. We are anticipating growth in demand from 5 to 5.5 million bpd this year.”
In a situation of this nature, it was extremely important not to allow any sharp upward change in production restraints and to avoid overheating markets.
“We need to keep our finger on the market pulse and not allow an overheating or a significant deficit,” Novak said.
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman adopted a more cautious stance. He said the deal’s adjustment mechanism of 500,000 bpd, up or down, remained the main instrument of OPEC+.
And, regardless of the decision to increase production over three months, ministers of the Monitoring Committee will continue to hold monthly meetings.
“Despite the fact that we talked today about a three-month period and what OPEC+ actions will be, we agreed that we will continue meetings every month,” Novak said.
“The next meeting will be in late April and. if necessary, after monitoring the situation, we will make decisions, either those we discussed today for June, or ones that will be required based on the current situation.”
