The current strategy consists of a progressive increase between May and July that adds up to almost 1.2 million barrels per day.
The members of OPEC + decided on Tuesday to keep pace with the increase in their crude production for July, without giving indications about the following months or addressing the return of Iranian oil to the market.
The organization “confirmed the decision taken” during the previous summit on “production adjustments for the month of July, taking into account the observed market fundamentals,” the cartel said in a statement after a short meeting of ministers.
The current strategy consists of a progressive increase between May and July that adds up to almost 1.2 million barrels per day, to which is added one million barrels voluntarily withdrawn by Riyadh at the beginning of the year.
Opep +, an alliance sealed at the end of 2016 between the 13 States of the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and ten allies, including Russia, held a first meeting of the monthly monitoring committee of the current group production reduction agreement (JMMC) and then held a brief ministerial summit.
Following this decision, oil rose on Tuesday.
A barrel of Brent from the North Sea (reference for Colombia) for delivery in August ended at 70.25 dollars in London, up 1.34% on the previous close. These levels were not seen since March, when a barrel was trading close to US $ 69.70.
In New York, a barrel of WTI for July gained 2.11% over Friday’s close at $ 67.72. On Monday the market was closed for the Memorial Day holiday in the United States.
“Clouds on the horizon”
The 23 members voluntarily give up producing more so as not to flood a market weakened by the health crisis.
But as prices return to early 2020 levels and demand strengthens, especially in Europe and the United States, they had a chance to reopen the taps.
The cartel maintained its forecasts at the beginning of the month and expects a rise of six million barrels per day this year compared to 2020, to the 96.5 million consumed daily on the planet.
“Demand improved in several major world markets, such as the United States and China,” the two largest oil consumers, Saudi Energy Minister and alliance leader Abdelaziz bin Salmán explained before the summit.
The stepbrother of the powerful crown prince Mohamed bin Salmán also welcomed the anticovid vaccination campaigns and the reduction of oil reserves in the world, although he also warned that there were “clouds on the horizon.”
“We are convinced that the world economy is on the way to recovery and that the situation is normalizing,” added Russian Deputy Prime Minister Alexander Novak, in charge of Energy.
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The tensions between Russia and Saudi Arabia, mentioned by several observers before the meeting and which have clouded previous meetings, did not finally take place on Tuesday.
The likely return of Iranian production was also not addressed at the meeting, the Saudi minister said at a press conference after the summit. And that despite the importance of its volume, on the bill and in the market.
However, this “controversial issue” will undoubtedly be on the table at “the next meetings,” estimated Samuel Burman, an analyst at Capital Economics, for whom Tuesday’s decision seeks to “sustain prices.”
The Islamic Republic has entered into indirect negotiations with the United States in Vienna, through the mediation of European countries, to revive an agreement on its nuclear program.
If the negotiations are successful, the lifting of some economic sanctions, such as the oil embargo in force since 2018, would clear the way for a considerable increase in Iranian production.
Iranian Oil Minister Bijan Namdar Zanganeh, quoted by Shana, the official agency of his ministry, on Monday called the fact of almost tripling the country’s production a “priority”.
