OPEC+ is moving towards gradually adding about 2 million barrels per day (bpd) to the oil market from August to December, an OPEC+ source told Reuters news agency as the group eases back on output curbs amid a recovering global economy and an oil price rally.
The source told Reuters that monthly increases would amount to less than 0.5 million bpd. Another OPEC+ source told Reuters that top OPEC producer Saudi Arabia and top non-OPEC producer Russia had a preliminary agreement for a deal on easing output curbs from August.
Responding to oil demand destruction caused by the COVID-19 crisis, OPEC+ last year agreed to cut output by almost 10 million bpd from May 2020, with plans to phase out the curbs by the end of April 2022. Cuts now stand at about 5.8 million bpd.
An OPEC+ panel on Tuesday said it expected oil demand to grow by 6 million bpd in 2021 but flagged risks of a glut in 2022, saying there were “significant uncertainties” including an uneven global recovery and rising cases of the Delta variant of the coronavirus.
Saudi Arabia, Russia and other OPEC+ members have been cooperating closely since their big falling out in March 2020 just before the pandemic sent oil prices diving. The price crash drove them back together to forge their supply pact.
Yet the group still faces a challenge over how quickly to unwind the cuts.