OPEC+ agreed on April 1 to gradually ease its oil output cuts from May, after the new U.S. administration called on Saudi Arabia to keep energy affordable, mirroring Donald Trump’s practice of calling OPEC’s leader over oil policy.
The group, which has been implementing deep cuts since oil prices collapsed in 2020, agreed to ease production cuts by 350,000 bbl/d in May, another 350,000 bbl/d in June and further 400,000 bbl/d or so in July.
Iran’s oil minister, Bijan Zanganeh, confirmed the figures, saying the group would have boosted output by a total of 1.1 million bbl/d by July.
Saudi Energy Minister Prince Abdulaziz Bin Salman told a news conference after the OPEC+ meeting that the April 1 decision had not been influenced by any talks with U.S. officials.
The minister said Saudi Arabia would gradually phase out its additional voluntary cut of 1 million bbl/d, by adding 250,000 bbl/d to the kingdom's production in May, another 350,000 bbl/d in June and then 400,000 bbl/d in July.
Under the deal on April 1, oil cuts implemented by OPEC, Russia and their allies, a group known as OPEC+, would be just above 6.5 million bbl/d from May, compared with existing curbs of slightly below 7 million bbl/d in April.
Brent crude, which slipped on news of the deal, was still trading above $63/bbl, still more than 20% up on the start of the year and not far from this year’s high around $71.
“We reaffirmed the importance of international cooperation to ensure affordable and reliable sources of energy for consumers,” Jennifer Granholm, the new energy secretary appointed by U.S. President Joe Biden, said on Twitter after her call with Saudi Energy Minister Prince Abdulaziz Bin Salman.
News of the call coincided with signs of a changing mood in the informal discussions between members of OPEC, Russia and their allies, the group known as OPEC+, although it was not clear if Granholm’s intervention was the catalyst.
A few days before the talks on April 1, OPEC+ delegates had said the group would likely keep most existing cuts in place, given uncertainty about the demand outlook amid a new wave of coronavirus lockdowns.
But in the 24 hours before the meeting started, sources said discussions had shifted to a possible output increase.
Prince Abdulaziz opened the meeting by saying the group should maintain a “cautious stance,” while Russia’s Deputy Prime Minister Alexander Novak offered a more bullish overview saying the global economy was recovering and fuel demand was rising.
In the past, Trump had used his influence to force Saudi Arabia to adjust policy. When prices spiked, he insisted OPEC raise production. When oil prices collapsed last year, hurting U.S. shale producers, he called on the group to cut output.
Until this week, Biden's administration had refrained from such an approach, keep more of a distance from Riyadh and imposing sanctions on some Saudi citizens over the 2018 murder of Jamal Khashoggi.
Even when OPEC+ decided on March 4 to keep steady output, triggering a price rise, the White House had made no direct comment.
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