It’s widely expected that OPEC and its allies (OPEC+) are meeting on March 4 to discuss a hike in oil production alongside April quotas amid an improved outlook for oil demand.
However, Russia and Saudi Arabia continue to remain at the opposite of the debate to open up the taps, S&P Global Platts noted in its latest editorial article.
Key takeaways
“The question is whether the OPEC+ alliance's warier countries – particularly Saudi Arabia – are in as much of a mood to celebrate by opening the taps.”
“The coalition is cutting 7.2 million b/d of crude production – roughly 7% of pre-pandemic supply – and under the rules, the curbs can be eased by up to 500,000 b/d monthly. Saudi Arabia must also decide whether to keep its voluntary additional 1 million b/d cut that is scheduled to end after March.”
“Many analysts, including OPEC's own, have concluded the market can likely absorb a 1.5 million b/d production increase without tipping into surplus, but releasing all that crude at once risks spooking traders and unravelling the price rally. Maintaining the cuts, however, could overheat the market and erode still fragile oil demand.”
“Potentially on opposing sides once again are Russia, which has consistently pushed to pump more, and Saudi Arabia, whose energy minister Prince Abdulaziz bin Salman has urged the alliance to go slow.”
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