OPEC + agreed to increase oil production from January 2021

OPEC + agreed to modestly increase oil production from January 2021 to 500,000 barrels a day.

View of Bin Omar natural gas extraction facility of Basra Gas Company, north of Basra port, Iraq. Photo: AFP / VNA

Many sources from the Organization of Petroleum Exporting Countries (OPEC) and partner countries, also known as OPEC +, on December 3, said that OPEC + has agreed to increase oil production at a modest rate since January. 2021 increases to 500,000 bpd, but fails to reach a more broad and long-term policy compromise for the rest of next year.

The above adjustment means that OPEC + will cut production by 7.2 million barrels a day – or 7% of global demand – from January 2021, down from the 7.7 million bpd cut. The current.

Restrictions are being taken to cope with the oil demand decline amid a second wave of acute respiratory infections COVID-19 that has surfaced in many parts of the world.

On the same day, the Kazakhstanra Energy Ministry announced that OPEC + had agreed to increase oil production by 500,000 barrels a day in January.

In addition, OPEC + agreed to meet monthly, commencing January 2021, to decide on this alliance’s policy.

OPEC + was previously supposed to extend the current production cuts until at least March 2021.

However, after positive hopes and signals about a number of licensed COVID-19 vaccines prompted a spike in oil prices in late November 2020, some manufacturers began to place questioned the need for strict control of oil policy in line with the policy of OPEC’s leading nation, Saudi Arabia.

According to the sources above, Russia, Iraq, Nigeria and the United Arab Emirates (UAE) have to a certain extent expressed interest in bringing more oil to the market in 2021.

Four sources from OPEC + said the alliance will meet monthly to decide on production policies after January 2021 and that the monthly increase is unlikely to exceed 500,000 barrels per day.

OPEC + must strike a balance, even if fragile, between pushing oil prices up enough to help bolster the budgets of member states, but not by too much to make the U.S. rival’s output soar. US shale oil price tends to increase above 50 USD / barrel.

The OPEC + monthly meetings are expected to make market prices more volatile and further complicate hedging for US oil producers.

Crude oil prices have little change after OPEC + decision and remained at about 48 USD / barrel.

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