The OPEC+ alliance will gradually ease the collective production cuts between May and July, as the ministers agreed earlier this month, Russia’s Deputy Prime Minister Alexander Novak told reporters on Friday.
The decision was taken by OPEC+, and the gradual reversal of part of the cuts will take place between May and July, Novak said, as carried by the Russian news agency Interfax.
Russia, the key partner of OPEC in the OPEC+ group, decided together with its allies led by Saudi Arabia to ease the collective production cuts by over 1 million barrels per day (bpd) over the next three months to July.
In early April, OPEC+ decided to gradually increase collective oil production by 350,000 bpd in each of May and June and by more than 400,000 bpd in July. Additionally, Saudi Arabia will also gradually ease its extra unilateral cut of 1 million bpd over the course of the next few months, beginning with monthly production increases of 250,000 bpd in each of May and June.
Before the OPEC+ meeting that agreed on these parameters, Novak said that the situation on the global oil market had improved since the March meeting. There are still many uncertainties on the global oil market, especially in Europe, Russia’s top oil diplomat said, but noted that there is currently a deficit of 2 million bpd on the market.
Novak also said at that meeting that he expects global oil demand to increase by 5 million bpd-5.5 million bpd this year compared to last year.
This week, OPEC raised its global demand growth estimate, and so did the International Energy Agency (IEA), giving the market hope that demand would rebound strongly later this year and offset the weakness seen in the first half due to surging cases and lockdowns in Europe and major oil importer India. The IEA now sees oil demand rising by 5.7 million bpd in 2021 compared to 2020, revising up its estimate by 230,000 bpd “to take account of better economic forecasts and robust prompt indicators.”
By Tsvetana Paraskova for Oilprice.com
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