As global oil demand recovers from the pandemic, OPEC and its allies have announced its commitment to improve oil production.
A committee led by Saudi Arabia and Russia agreed the coalition should press on with its roadmap for increasing supply by 2 million barrels a day over the next three months, a decision that was later rubber-stamped in a statement from the whole group.
Bloomberg reports that this year, World Oil Consumption will rebound by 6 million barrels a day. OPEC+ estimates that though the recovery remains at risk from virus outbreaks in India and Brazil. As a result, the glut of oil inventories that amassed when demand collapsed last year will be almost gone by the end of this quarter.
“We can take comfort in knowing that our leadership has helped turn the tide,” Mohammad Barkindo, secretary-general of the Organization of Petroleum Exporting Countries, said on Twitter. “But at the same time, the persistence of Covid-19 reminds us that this is no time to stray from the cautious and steadfast approach we have taken over the past year.”
The OPEC+ alliance slashed output to help revive the global oil industry from an unprecedented price rout last year when the pandemic crushed fuel demand. The producers are now carefully restarting those supplies as economic activity resumes, beginning with an increase of about 600,000 barrels a day in May. The group is currently idling about 8 million barrels a day, or roughly 8% of world supplies.
Meanwhile, in a statement, OPEC+ “highlighted the continuing recovery in the global economy” but also noted “that Covid-19 cases are rising in a number of countries, despite the ongoing vaccination campaigns, and that the resurgence could hamper the economic and oil demand recovery.”
The global oil market “is on the one hand positive, we see a recovery of demand and higher global GDP estimates,” Russia’s Deputy Prime Minister Alexander Novak told Rossiya 24 television after the OPEC+ committee’s conference call. Nevertheless, the group must keep monitoring the coronavirus situation across many regions, including Asia, he added.
“We see that some countries record higher coronavirus numbers, like in India and Latin America, which raises some concerns about further growth of demand,” Novak said.
Crude futures held gains after the OPEC+ gathering, trading 0.4% higher at almost $66 a barrel in London.