Oil prices are rising after Opec + decided to resume monthly increases in oil production from May to July. Saudi Arabia is phasing out its voluntary cuts.
Published: Just updated
The oil cartel Opec and allies such as Russia (Opec +) held a video meeting on Thursday to adopt oil production for the month of May.
The result was that Opec + increases production by 350,000 barrels per day in May and June, and 450,000 barrels per day in July.
At a post-meeting press conference, Saudi Arabia’s Energy Minister Prince Abdualazis bin Salman said the cartel must continue to be cautious about the increase in the face of uncertain times.
Several media, included Bloomberg and Reuters, announced the agreement during the meeting.
– The numbers everyone had were correct, bin Salman confirms at the press conference.
Oil prices are rising
The oil price has been very volatile during the meeting.
The oil price fell after the first reports of the increase came around kl. 16:30, but after the meeting the price skyrocketed.
Around 22:00 Norwegian time, one barrel of North Sea oil is traded for 64.6 dollars and one barrel of WTI oil for 61.2 dollars.
In a market comment after the decision, the analysis agency Wood Mackenzie writes that the agreement will provide support for the oil price, but also help to prevent the price from rising sharply if oil demand improves.
Saudi Arabia is phasing out voluntary cuts
In April, Opec + cut production by more than 7 million barrels per day in an attempt to push up oil prices. Saudi Arabia has voluntarily cut an extra million barrels per day at the top.
In advance, experts have expected that Opec + will maintain the cuts from April and that Saudi Arabia will continue its cautious line to the economic upswing after the pandemic.
According to Bloomberg, the increase, which was proposed by Saudi Arabia, would mean that the kingdom would phase out its voluntary cut over three months: 250,000 barrels in May, 350,000 barrels in June and 400,000 barrels in July.
Bin Salman confirms the figures at the press conference.
Unexpected turn in uncertain times
The increase in production came as a surprise, partly because Saudi Arabia has warned of uncertain economic prospects in the world before and during the meeting.
During the meeting on Thursday, Saudi Arabia’s Minister of Energy said the following:
– Last month we asked for a cautious and restrained approach, and – unfortunately – we have been right by the subsequent development.
On Wednesday night, Opec’s Secretary General, Mohammad Barkindo, issued a statement saying that one must remember that the environment remains “challenging, complicated and insecure”.
Talked to the US Secretary of Energy
On Thursday night, US Energy Secretary Jennifer Granholm announced that she had spoken with Saudi Arabia’s Energy Minister before today’s OPEC meeting. On Twitter, she describes the conversation as “productive”.
– We confirmed the importance of international cooperation to ensure affordable and reliable energy sources for consumers, Granholm wrote on Twitter last night.
She also made it clear that they discussed “closer cooperation” to, among other things, solve common challenges and develop renewable energy sources.
At the press conference after the meeting, bin Salman denies that the countries discussed the oil market or the oil price.
Updated: April 1, 2021 10:17 PM
Get the latest news delivered to your inbox
Follow us on social media networks