The world’s leading oil producers agreed on Sunday to continue to modestly boost output from August reaching a compromise after the United Arab Emirates blocked a deal earlier this month.
An OPEC+ meeting decided to raise output by 400,000 barrels per day (bpd) each month from August to help fuel a global economic recovery as the pandemic eases, the group’s Vienna-based secretariat said in a media statement.
The grouping will “assess market developments” in December, it said. The deal also extends a deadline on capping output from April next year to the end of 2022.
Earlier in July, negotiations of OPEC+ members on easing production cuts became deadlocked due to a row between the world’s largest oil exporter Saudi Arabia and neighbour the United Arab Emirates.
Since May, the 23-member grouping, which also includes Russia, had raised oil output bit by bit, after slashing it more than a year ago when the coronavirus pandemic crushed demand.
The aim is to return to pre-pandemic production levels, with the alliance still pumping 5.8 million bpd less than it was before the pandemic.
In a rare challenge to OPEC leader Saudi Arabia, the UAE rejected the proposed deal earlier this month as “unjust”, leading to a stalemate.
But in a compromise, Sunday’s discussions agreed to adjust output quotas next May for the UAE, Iraq, Kuwait, Russia and Saudi Arabia itself, meaning their actual cuts will be less.
Saudi Energy Minister Prince Abdulaziz bin Salman, who chairs the OPEC group, declined to say how the new quotas were decided and beneficiaries chosen, saying it had been part of “consensus building”.
Russian Deputy Prime Minister Alexander Novak told public television channel Rossia 24 that the meeting confirmed “our desire to be constructive and to find a consensus”.
“The pandemic is not yet overcome, but we are seeing that thanks to vaccination all over the world, demand for our production is recovering as is the use of cars and air planes,” he said.
“It is therefore very important for us to fulfil our responsibilities and allow a recovery of the world economy.”
‘Flurry of talks’
Observers had expected a deal.
“A flurry of talks were held on Saturday to try and close the gap,” tweeted Herman Wang, an editor of S&P Global Platts, which specialises in coverage of the energy industry, ahead of the meeting, which lasted just about one hour.
Oil prices — which had already been sliding owing to concerns about the global economy — plummeted in April 2020 as coronavirus spread around the world and battered global consumption, transport and supply chains.
OPEC+ then decided to withdraw 9.7 million bpd from the market and to gradually restore supplies by the end of April 2022 — a deadline that has now been extended.
Benchmark oil prices rebounded as a result and have reached two-and-a-half-year highs. The main international oil contracts have been trading around $75 per barrel.
Economic rivalry was at the heart of the feud between OPEC members as the Gulf states try to cash in on their vast oil reserves as they face the beginning of the end of the oil era.
Disagreements between Saudi Arabia and UAE — once inseparable allies — are usually resolved behind palace walls and rarely spill into the open.
Ministers from OPEC+ countries have gathered frequently since the spread of the new coronavirus to assess the market with the next meeting scheduled for September 1, according to Sunday’s statement.