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OPEC+ discusses maintaining oil production cuts

April 1, 2021 at 2:02 pm

The OPEC Secretariat building ahead of the the 177th Organization Of Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria, on Wednesday, December 4, 2019. [Stefan Wermuth/Bloomberg via Getty Images]

OPEC+ today debated whether to keep deep oil output cuts in place or ease them after the administration of US President Joe Biden resumed Donald Trump’s practice of calling OPEC leader Saudi Arabia and said energy should be kept affordable, Reuters reported.

US Energy Secretary Jennifer Granholm said on Twitter she had spoken to Saudi Energy Minister Prince Abdulaziz Bin Salman.

“We reaffirmed the importance of international cooperation to ensure affordable and reliable sources of energy for consumers,” she wrote, potentially adding a further reason for the group to consider a production hike.

Brent crude was above $63 a barrel today, up more than 20 per cent since the start of 2021 and near this year’s high.

The Organisation of the Petroleum Exporting Countries and allied producers, a group known as OPEC+, have cut output by almost seven million barrels per day (bpd) to support prices. In addition, Saudi Arabia has made an extra one million bpd voluntary cut.

Today’s virtual meeting of OPEC+ was scheduled to start at 1300 GMT. “The picture is still not clear,” one source said.

Heading into the meeting, OPEC+ delegates had said the group would likely keep most of those cuts in place, given a weak demand outlook because of new coronavirus lockdowns.

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But the mood changed in the past 24 hours and the group is now deliberating whether to roll over the cuts or raise output, three OPEC+ sources said. The increase could amount to 0.5 million bpd, two sources said.

It was not clear if Granholm’s call influenced the shift.

Trump repeatedly used his influence to force Saudi Arabia to adjust oil output policy. When prices spiked, he insisted OPEC raise production. When oil prices collapsed last year because of the pandemic, he called Saudi Arabia and Russia to help clinch record oil output cuts to protect the US shale oil industry.

Biden’s administration, which had at least until this week refrained from such an approach, has had appeared to have much cooler dealings with Riyadh and imposed sanctions on some Saudi citizens over the 2018 murder of Jamal Khashoggi.

Iran, whose output has been severely crimped by US sanctions, could also become a topic for discussion after it emerged Iranian exports were on the rise, especially to China, amid a renewed tension between Washington and Beijing.