The Opec+ oil alliance decided on Thursday to increase output gradually from May as pressure mounts from inside and outside the producers group to release more barrels on to the market and keep crude prices in check. The decision by the 24-member body comes despite Abdulaziz bin Salman, Saudi Arabia’s energy minister, warning Opec and allies including Russia earlier in the day that crude’s recovery was “far from complete” with the pandemic still wreaking havoc globally.
“Until the evidence of the recovery is undeniable, we should maintain this cautious stance,” Prince Abdulaziz, son of the Saudi king, told reporters and ministers ahead of the formal virtual gathering of oil officials. Still, Alexander Novak, Russia’s deputy prime minister, said the market had improved substantially as vaccines to combat the virus were rolled out and Opec+ had to ensure the market did not “overheat”.
Consumer countries are also watching the actions of Opec+ carefully, with those such as India wary about producers keeping too tight a hold on output that will only propel a surge in prices.
Jennifer Granholm, US energy secretary, added another layer of uncertainty into the group’s decision-making. She had a call with Prince Abdulaziz on Wednesday and emphasised the importance of “affordable” energy.
Some analysts took comments by her on Twitter to be a plea for the kingdom to keep a lid on crude oil prices that in turn influence US gasoline prices. A sharp fall in US production last year reminded American operators of Opec’s sway over prices.
Producers will collectively increase output by 350,000 barrels a day in May, another 350,000 b/d in June and around 441,000 b/d for July, one Opec delegate said. Some analysts had expected countries to hold fire on additional increases.