OPEC+ meeting agreed to increase oil supply as oil prices soar

As the global economy recovers from the coronavirus pandemic, OPEC+ ministers will meet on Sunday to try again to reach an agreement on a rapid increase in oil supply in response to soaring prices.

Due to differences between Saudi Arabia and the United Arab Emirates, the organization tried to reach agreement on a new production policy earlier this month. The organization included allies such as OPEC countries and Russia, but failed.

Due to the decline in demand due to the pandemic, OPEC+ agreed to a record cut of nearly 10 million barrels per day last year, and gradually reduced production to about 5.8 million barrels per day.

The group originally planned to further reduce production cuts of 2 million barrels per day between August and December 2021, as oil prices have climbed to 2-1/2-year highs.

An OPEC+ source told Reuters on Sunday that OPEC+’s major oil-producing countries have reached a preliminary agreement to gradually increase oil production until December 2021 and extend the overall agreement to the end of 2022, but some details have not yet been agreed.

Although both Riyadh and the UAE support an immediate increase in production, the UAE opposes Saudi Arabia’s idea of ​​extending the overall supply management agreement from the current plan to December 2022, which will end in April 2022.

The UAE argues that if the agreement is to be extended, it hopes to obtain a higher production quota.

According to three OPEC+ sources, production quotas for the UAE and other member states such as Iraq and Kuwait will be increased on Sunday.

Producers need to decide when to set these higher output quotas, the baseline. Sources told Reuters that the UAE may see its benchmark daily output increase from the current 3.168 million barrels to 3.65 million barrels in April 2022.

It is unclear which month OPEC+ will release more oil to the market-August may be difficult because Saudi Arabia has set an official price for its oil, and releasing additional barrels may allow existing customers feeling anxious.

OPEC stated that Sunday’s virtual meeting began around 1010 GMT.