VIENNA (AP) — OPEC and a group of allied countries including Russia agreed Thursday to increase oil production by 500,000 barrels per day from January and will meet monthly after that to decide whether to further adjust output.
The decision followed days of wrangling among the oil producing countries over whether to increase output early next year at all after the pandemic sapped demand for energy this year and clouded the outlook for the industry.
The OPEC members and a group of allies had made deep cuts in production last year to support prices as the pandemic sharply reduced demand for fuel.
Analysts said simply extending the 7.7 million barrels per day in cuts was the course preferred by Saudi Arabia, which takes a leadership role among member countries, and also by Russia, the biggest of the non-members who have been cooperating with OPEC.
But they faced pushback from countries including the United Arab Emirates, which opposed the extension and wanted countries that had overproduced their quotes to make compensatory cuts.
Russian Deputy Prime Minister Alexander Novak said that participants agreed that 2 million barrels a day needed to return to the market “at some point” but that any increase would be gradual. The monthly meetings could decide in either direction, up or down, he said.
Oil producing countries face a dilemma: producing more increases their revenues but could send prices lower, especially given still-weak demand and uncertain prospects for the speed and timing of a post-pandemic recovery
The U.S. benchmark for oil traded at $45.74 per barrel Thursday on the New York Mercantile Exchange, up 46 cents on the day. That is down from around $63 at the start of 2020.