OPEC + sticks to plan to gradually increase oil production, prices skyrocket
- Oil prices soar more than 50% in 2021
- US official says oil market is “worrying”
- OPEC + wary of any new wave of coronavirus, source says
- Demand rebounded, supply struggled to keep up
- Russian Novak says demand usually eases in Q4
LONDON, Oct. 4 (Reuters) – OPEC + said on Monday it would stick to an existing pact for a gradual increase in oil production, sending crude prices to three-year highs and adding to inflationary pressures that consumer countries fear will derail an economic recovery from the pandemic.
The Organization of the Petroleum Exporting Countries, Russia and their allies, known as OPEC +, have faced calls for additional supplies from large consumers, such as the United States and India. , after oil has jumped more than 50% this year.
OPEC + “reconfirmed the production adjustment plan” it had previously agreed which would see 400,000 barrels per day (bpd) added in November, the group said in a statement released after ministerial talks in line.
Brent crude climbed above $ 81 a barrel on news that the group would maintain its incremental production plan.
“We will monitor the situation, as we know, demand generally drops in the fourth quarter, our plans to increase (production) are uneven,” we will monitor the market balance, “said the Russian Deputy Prime Minister Alexander Novak.
An OPEC + source told Reuters ahead of Monday’s ministerial talks that the group had come under pressure to ramp up production faster, but added: “We are afraid of the fourth corona wave, no one wants to do anything. great movements. “
The group had agreed in July to increase production by 400,000 b / d per month until at least April 2022 to phase out 5.8 million b / d of existing production cuts, already very small compared to restrictions. that were in place at the worst of the pandemic.
Demand rebounded quickly, while supply was disrupted by factors ranging from hurricanes that hit U.S. production to low levels of investment in the industry at the height of the pandemic when demand crunched.
A senior official for US President Joe Biden met with Saudi Crown Prince Mohammed bin Salman in Saudi Arabia on a range of issues last week, saying the oil was “of concern.” India, another big consumer of oil, has pushed to increase supply. Read more
“For now, most producer members can be comfortable with a Brent price of $ 80 per barrel, but there is a risk of backlash or pressure from buyers like the United States and China, who are openly calling for lower energy prices, “consulting firm Rystad Energy said. written before ministers meet.
Analysts had said they expected uncertainty over the demand impact of the coronavirus variants, which threaten further economic disruption, to weigh on OPEC + decision-making.
Reporting by Alex Lawler and Ahmad Ghaddar in London and by Vladimir Soldatkin and Olesya Astakhova in Moscow; Editing by Veronica Brown and Edmund Blair
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