- The price of oil rose more than 50% in 2021
- Demand has recovered and supply has struggled to keep up
- US official says oil market is “worrying”
- OPEC + suspicious of a new coronavirus surge, a source says
- Russia’s Novak says demand tends to decline in the fourth quarter
LONDON, Oct. 4 (Reuters) – OPEC + said Monday it would stick to an existing pact to gradually increase oil production, propel crude oil prices to three-year highs and increase inflationary pressures that consumer nations fear will spur economic recovery The pandemic will dissuade them from doing so.
The Organization of Petroleum Exporting Countries, Russia and its allies, known as OPEC +, have been called for additional supplies by large consumers like the United States and India after oil prices rose more than 50% this year.
OPEC + “reaffirmed its production adjustment plan,” the group said in a statement following online ministerial talks, referring to a previously agreed deal that would add 400,000 barrels per day (bpd) in November.
Brent crude surged above $ 81 a barrel on news that the group would stick to its plan to gradually increase production instead of adding more supply to the market.
“We will be monitoring the situation, as we know, demand usually falls in the fourth quarter,” said Russian Deputy Prime Minister Alexander Novak after the talks, adding that he believes the market is now balanced.
An OPEC + source had told Reuters shortly before the ministerial talks on Monday that the company had come under pressure to ramp up production more quickly, but added: “We are afraid of the fourth corona wave; nobody wants to take big steps.”
The group agreed in July to increase production by 400,000 bpd per month through at least April 2022, phasing out 5.8 million bpd of existing production cuts – already greatly reduced from the huge restrictions imposed during the worst of the pandemic.
Demand has rebounded quickly while supply has been disrupted by factors such as hurricanes that weighed on US production and low investment across the industry during the depths of the pandemic when demand crumbled.
A senior advisor to US President Joe Biden met with Saudi Crown Prince Mohammed bin Salman in Saudi Arabia last week on a number of issues and said oil was “a matter of concern”. India, another major oil consumer, has pushed for more supply. Continue reading
“The result of the OPEC + meeting was not a surprise, but when prices are above $ 80 a barrel of Brent, this is a level that makes customers uncomfortable and producers happy but cautious,” wrote consulting firm Rystad Energy .
Analysts had expected uncertainty about the impact of variants of the coronavirus on demand that threaten new economic disruptions to weigh on OPEC + decisions.
Reporting by Alex Lawler and Ahmad Ghaddar in London, Vladimir Soldatkin and Olesya Astakhova in Moscow; Letter from Edmund Blair; Arrangement by Veronica Brown and Mark Heinrich
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