The OPEC+ defied the expectations of the analysts on
Thursday, April 1, by agreeing to increase production for May, June and July.
The rise in output will be 350,000 bpd for May and
June; for July, the output will be increased further by 100,000 bpd.
In addition, Saudi Arabia will roll back its voluntary
cut of 1 million barrels a day, while increasing its contribution for the same
period by 250,000bpd, 350,000 and 400,000 respectively.
Saudis maintained their position, the need of
exercise caution, right until the monthly meeting of the organization. They,
however, changed the position before the end of the meeting that resulted in
the unexpected – increasing the output for three months.
Up until the final communique was issued, mixed
signalS were streaming from the sources connected to the OPEC+.
The OPEC+ has been under pressure from many
countries for cutting down on the output, purely for inflating the price. India
has been at the forefront of the tidal wave of criticism directed at the
cartel, and especially at its de factor leader, Saudi Arabia.
Since India is a significant customer from Asia,
Saudi Arabia cannot ignore it as if it was irrelevant; India even threatened
that they will look out for sellers outside the Middle East, if the output is
not increased by its suppliers in the region.
In another development, Jennifer Granholm, the U.S.
Energy Secretary, called her Saudi counterpart on the eve of the OPEC+ meeting
to voice her concern about the rise in the price of oil and the need of affordable
energy.
It looks like the pressure from the US and India has
compelled the OPEC+ not to cut the output when the world is reeling from a
pandemic-of-a-century; Saudi oil minister denied it was the case, though.
The arrival of oil into the markets, along with the
way Western governments handle the new outbreaks of the pandemic, and a
possible breakthrough in the negotiations of nuclear deal between Iran and the
West will determine the price factor of crude oil in the coming weeks.
If the steady demand grows at the current rate, the
price may follow the pattern – perhaps, with a diminished momentum.
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Production adjustment table from the OPEC+ for May, June and July:
