Major Producers are Maintaining Production Plans

The Organization of the Petroleum Exporting Countries (Opec) and non-OPEC   producers on Monday reaffirmed plans to increase oil production, AFP reported.

OPEC said in a statement on the 1st that the ministerial meeting of OPEC and non-OPEC oil producers held on the same day reaffirmed the major oil producers' commitment to market stability, the decision to reduce production by 2 million barrels per day in May and July, and the decision to adjust production in July. Under the agreement reached between Opec and non-OPEC producers in early April, output will rise by 350,000   barrels a day in both May and June, and by 450,000 barrels a day in July. Saudi Arabia will also phase out its voluntary production cuts of 1m b/d.Last year, major producers decided to cut output by a record 9.7 million barrels per day (BPD) after the impact of the pandemic caused a slump in demand. This was then cut to 7.7 million BPD and further reduced to 7.2 million BPD from January.

In a speech, Saudi Energy Minister Abdulaziz bin Salman said there are clear signs of improvement in crude oil demand, crude inventories are falling back to the average level between 2015 and 2019, and global vaccination will bring the oil market back into balance. Opec should actively stabilise the oil market. He urged non-compliant Opec   countries to compensate for excess production.

Russian Deputy Prime Minister Novak noted that the producers will discuss production prospects and the oil market, and that our cooperation is good for the global market.

Opec Secretary General Mohammad Barkindo said the forecast continues to show a positive trajectory for economic and oil demand growth, particularly in the second half of 2021, with global oil demand expected to exceed 99 million barrels per day in the fourth quarter.

The main headwind for oil markets in recent months has been the prospect of a significant increase in Iranian crude exports as a result of another nuclear deal between Iran and the United States. If Iran is able to return to the export levels of three years ago, that could mean 1.5 million barrels a day of crude oil entering the market, AFP said. Barkindo, on the other hand, said he expects the return of Iranian oil production and exports to be orderly and transparent, and that there should be no concern about the increase in Iranian oil supplies.

International crude oil futures prices rose significantly on Monday, with Brent crude oil futures breaching the round 70 USD per barrel mark for the first time since the end of May 2019. The Financial Times quoted some traders as saying that the introduction of vaccines and government stimulus measures had increased demand for oil, which had helped push crude prices up 35 per cent since the end of last year. Oil prices surged further after a technical committee of Opec and non-OPEC producers confirmed a forecast that global oil demand will surge by 6 million barrels a day this year, The Wall Street Journal reported, citing people familiar with the matter.