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Energy analysts anticipate that a monthly meeting of the world’s major oil producers will see the group loosen output curbs even further starting in August. Members of the OPEC+ group, a coalition of OPEC countries led by Saudi Arabia and non-OPEC countries led by Russia – will meet via videoconference tomorrow to determine the next step in their oil production policy.
In May of last year, the alliance began withholding nearly 10 million barrels per day of output, the largest in history, to keep crude prices from plummeting due to demand destruction caused by the coronavirus. The first decrease lasted three months. The production quota was lowered to 7.7 million barrels per day for the rest of the year, beginning in August.
The group agreed to boost output by 500,000 barrels per day starting in January 2021, rather than the 2 million barrels per day previously planned to maintain its oil price support mechanism. On a more positive note, and much to everyone’s surprise, Riyadh agreed to cut oil output by 1 million barrels per day in February and March, allowing it to pump at levels below the OPEC+ agreement’s production cap for two months. The world’s top oil exporter’s further cuts also helped to counterbalance the combined addition of 75,000 barrels per day to the market by Russia and Kazakhstan.