OPEC and an alliance of other leading oil producers agreed to increase their collective production by more than two million barrels a day over the coming months, betting on resurgent demand as they and the rest of the world assess the economic fallout from the pandemic .
The organization of the petroleum exporting countries and a group of other large producers under the leadership of Russia agreed, according to delegates, to increase production by 350,000 barrels per day in May and by the same amount again in June. They agreed to increase production by another 450,000 barrels per day in July. Saudi Arabia, meanwhile, agreed to ease the discrete, unilateral cuts of one million barrels a day introduced earlier this year. It is planned to end these cuts altogether by the end of July, delegates said.
The agreement between the two groups, collectively known as OPEC +, was a compromise between Saudi Arabia, the de facto leader of OPEC, and Russia. Saudi Arabia had tried to maintain the cuts, skeptical of a quick return in oil demand during the pandemic. Russia has since said that the world already needs more oil in many regions to feed the resurgent economies.
The decision is another sharp divergence in OPEC’s zig-zag oil strategy over the past year and underscores the difficulty of forecasters in the group – and elsewhere – calling for the start of a sustained global recovery from the pandemic.
Before the meeting between the two groups, Saudi Arabia had initially backed plans to keep production unchanged, delegates said. The decision to increase production “was a complete about-face,” said one of them. During the pandemic, the group appears to have shifted significantly from optimism to pessimism about prospects for a post-pandemic economic recovery and a strong recovery in oil demand. Saudi Arabia has endeavored to remain cautious while Russia has endeavored to increase production.