The Organization of Petroleum Exporting Countries (OPEC) and its allies agreed on Wednesday to lower their current crude oil production cut level to 7.7 million barrels per day (bpd) starting from August, from the existing 9.7 million bpd.
The group known as OPEC+ has been curbing their crude oil output by a total of 9.7 million bpd from May 1 through July 31 in order to mitigate the adverse impact of the novel coronavirus (COVID-19) on global oil demand.
With overall oil consumption rising around the world and global oil market approaching a rebalance, the 23-member group has agreed to curb its current production cut level by 2 million bpd starting from August 1.
"Demand is growing," OPEC de facto leader Saudi Arabia's Energy Minister Abdulaziz bin Salman said after the conclusion of the 20th meeting of Joint Ministerial Monitoring Committee (JMMC) via videoconference.
"The 23 countries within OPEC+ are opening and unlocking our economies. So, we are expecting growth in our domestic economies," he said.
Stressing the current change in transportation patterns around the world, bin Selman said OPEC+ is expecting jet fuel, gasoline and diesel consumption to grow in the coming months.
Bin Selman also underlined that some of the OPEC+ member countries that failed to fully comply with their individual output cut levels in May and June will reduce their crude production in the months of July, August and September for compensation.
That is why the "effective" total oil production cut level of OPEC+ could be around 8.1 million bpd in the month of August, he added.
"We are all equal. All of us have cut 23% of our production," bin Selman noted.
Russian Energy Minister Alexander Novak said the OPEC+ group is looking at how the market is developing and it is adapting its estimates accordingly, adding that the market is very close to rebalance.
Noting that OPEC+ needs to continue monitoring global oil inventories, he said the group's increasing crude output from August onwards "should not affect the market because of rising demand in domestic markets."
"The decision to increase production now is positive for the oil market because it shows recovery in the industry. It will also provide rise in production, increase in taxes, and higher GDP," he concluded.
The next JMMC meeting of OPEC+ nations will be held on August 18.
By Ovunc Kutlu