OPEC+ members have agreed to extend production cuts for another month through April with the exception of Russia and Kazakhstan.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, held the 14th Ministerial Meeting via videoconference to balance the oil markets struggling with a supply glut and weak demand.
According to the new deal, Russia and Kazakhstan will be allowed to increase production by 130,000 and 20,000 barrels per day (bpd), respectively due to continued seasonal consumption patterns.
Including Russia and Kazakhstan’s output rise exemption, the group will reduce its production by 7.9 billion bpd in April.
The two countries had been excluded from production cuts during the previous meeting. In February and March, Russia and Kazakhstan collectively increased their output by 75,000 bpd while the rest of the group held output steady.
The new agreement will also extend Saudi Arabia’s two-month output cut by 1 million bpd for an additional month through April.
OPEC members noted that the voluntary, extra supply reductions made by Saudi Arabia, which took effect on Feb. 1 for two months, supported market stability.
The overall conformity of OPEC members with the output cuts was 103% in February, the group said.
It also noted that since the April 2020 meeting, OPEC and non-OPEC countries had withheld 2.3 billion barrels of oil by the end of January 2021, accelerating a rebalance in the oil market.
Pointing to recent improvements in the market sentiment through the acceptance and rollout of vaccine programs and with additional stimulus packages in key economies, the group cautioned all participating countries to stay on course, remain vigilant and flexible given the uncertain market conditions.
Saudi Energy Minister Abdulaziz bin Salman described the new deal as “a surprising agreement”, while Alexander Novak, the Russian deputy prime minister, said the meeting was very productive and fruitful.
"... Based on the market analysis, we have once again underscored the need to remain vigilant and to stick to the previously agreed parameters of the declaration of cooperation, especially for those countries which have not been conforming,” Novak said.
The global economy is slowly improving, he said, adding that OPEC+ is now setting the blocks for future growth, with this year being a crucial one on this path.
The next meetings of the Joint Ministerial Monitoring Committee (JMMC) and OPEC and non-OPEC members are scheduled for March 31 and April 1, respectively.
-Oil prices jump as oil giants keep markets balanced
By the time the meetings started, oil prices also began to rise with both benchmarks showing increases of more than 4%.
Brent reached $67.72 per barrel for a 5.69% rise after closing Wednesday at $64.07 a barrel. This was the highest level in 14 months.
American benchmark West Texas Intermediate (WTI) was at $65.84 per barrel at the same time for a 7.44% increase after it ended the previous session at $61.28 a barrel.
By Sibel Morrow