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OPEC and allies agree to gradually increase oil output

by ChemOrbis Editorial Team - content@chemorbis.com
  • 02/04/2021 (09:33)
The Organization of the Petroleum Exporting Countries (OPEC) and its allies have agreed to gradually increase their output over the next three months starting from May.

Accordingly, the cartel will boost production by 350,000 barrels/day in May, 350,000 b/d in June, and 400,000 b/d in July. The OPEC and its oil producing members are currently reducing production by around 8 million b/d, including Saudi Arabia’s voluntary supply cut of 1 million b/d.

Saudi Arabia will also gradually ease its extra production cut of 1 million b/d starting from May and eliminate it altogether by the end of July.

The OPEC’s decision was based on expectations of a recovery in oil demand by this summer as vaccine rollouts are expected to accelerate in major economies. Still, COVID-19 risks continue to cast a shadow on the demand outlook for the near term.

Oil prices surged by more than 2% on Thursday despite the output increase decision. West Texas Intermediate (WTI) oil rose by $2.29 to close at $61.45/bbl while Brent crude oil futures jumped $2.12 to $64.86/bbl from Wednesday.

Both oil benchmarks were trading sharply up by nearly 4% from Thursday’s close at the time of writing.
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