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Monday 5 April 2021

OPEC+ to Ease Restrictions on Oil Production

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  3 forum posts

MOSCOW (Kommersant) — Major oil producers unexpectedly stepped up their oil production for the next three months by 2 mln barrels per day, or about 2% of global consumption, despite the threat of a new wave of coronavirus and lower oil prices in recent weeks.

Saudi Arabia, which until now insisted on maintaining strict quotas, sharply changed its mind following the results of telephone negotiations with representatives of the United States and Russia. As a result, in May-July, OPEC+ will increase production by 1.1 mln barrels per day (bpd), and Riyadh will gradually roll back its voluntary reduction by 1 mln bpd.

The new OPEC+ approach means that over 2 mln bpd will return to the market in the next three months. Russia and Kazakhstan, which, unlike other OPEC+ countries, were able to increase production in April by 130,000 bpd and 20,000  bpd, respectively, will increase production more slowly in the next three months. Under the new agreement, Russia was given the opportunity to additionally beef up production by 114,000 bpd cumulatively in May-July.

The OPEC+ decision will allow Russia to produce an additional 1.4 mln tonnes of oil in May-June, according to Daria Kozlova from Vygon Consulting.

In her opinion, this increased production is important to ensure the domestic market and the loading of refineries before the planting season and the holiday season. Russia’s final level of oil production for 2021 will depend on further decisions by OPEC+, the expert noted, and Russian companies need more long-term signals on production recovery to the pre-crisis level. If after July, OPEC+ will systematically step up production by 500,000 bpd per month, then Russia’s average production in 2021 should be 10.5 mln bpd, which is 7% lower than in pre-crisis 2019, Kozlova noted.

  Forum posts

  • sooner or later, Iran will resume its exports at full capacity and wreak havoc on the markets. Russia will do everything in its power to prevent this. The Iranians are stupid to think that Putin is their friend. He doesn’t want Iranian oil on the markets, Iran is a competitor for him.

  • This shows the OPEC+ nations’ eagerness to increase the supply to support their weak economies by oil revenue. BTW, oil is down:
    — Crude is trading at $64.51/bbl
    — Crude short term range: $63-66

  • At the moment, however, traders prefer to focus on the recovering US economy rather than on the OPEC decision. In the US labor market, the number of new jobs increased from 468,000 to 916,000 instead of estimated 647,000; The unemployment rate dropped from 6.2% to 6%; Employment for January and February was revised upwards.

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