OPEC and an alliance of other top oil producers agreed to boost their collective production by more than two million barrels a day over coming months, betting on resurgent demand as they and the rest of the world assess the economic consequences of the pandemic’s trajectory.
The Organization of the Petroleum Exporting Countries and a group of other big producers led by Russia agreed to boost output in May by 350,000 barrels a day, and by the same amount again in June, according to delegates. They agreed to then increase output by another 450,000 barrels a day in July. Saudi Arabia, meanwhile, agreed to start easing separate, unilateral cuts of one million barrels a day that it put in place earlier this year. It plans to end those cuts altogether by the end of July, delegates said.
The agreement Thursday between the two groups, together called OPEC+, was a compromise between Saudi Arabia, OPEC’s de facto leader, and Russia. Saudi Arabia had sought to maintain cuts, skeptical of a quick return in oil demand during the pandemic. Russia, meanwhile, has said the world already needs more oil to feed resurgent economies in many regions.
The decision is another sharp swerve in OPEC’s zigzag oil strategy over the past year, underscoring the difficulty among forecasters in the group—and elsewhere—to call the start of a sustained global recovery from the pandemic.
Ahead of the meeting between the two groups, Saudi Arabia had initially backed plans to keep production unchanged, delegates said. The decision to hike output “was a complete U-turn,” one of them said. Throughout the pandemic, the group has appeared to shift sharply from optimism to pessimism over the prospects of a post-pandemic economic recovery—and a strong rebound in oil demand. Saudi Arabia has pushed to stay cautious, while Russia has been eager to lift output.