Opec+ Oil Output Recovery Prospect
The Organization of Petroleum Exporting Countries (Opec) and its allies’ has expressed growing confidence in the global economic recovery and has decided to go ahead with its plans to gradually curb production cuts in coming months, despite surging coronavirus cases in some countries.
The global primary energy demand is expecting to continue growing in the medium and long term, rising by 25% by 2045. Oil is projected to remain the largest contributor to the global energy mix by 31%, says Opec Secretary General Barkindo. The Opec oil cartel has raised its 2021 demand forecast to 96.5 million barrels per day (bpd).
Opec+ group that includes heavyweight producer Russia, kept its forecast for global demand growth for this year unchanged, projecting it to rise by 6 million bpd for 2021 after the biggest ever fall of 9.5 million bpd due to the pandemic.
In an attempt to support the market and counter the plunge in prices, Opec+, which is responsible for more than a third of global production, cut supply by a record 9.7 million bpd last year, before easing cuts to 7.7 million and eventually 7.2 million from January.
Saudi Arabia has since taken on cuts of 1 million from the beginning of February through March.
The 23-nation coalition will boost output by 350,000 bpd in May, add the same volume again in June and increase by 450,000 bpd in July. Also, Saudi Arabia will roll back its voluntary extra 1 million bpd cut, adding 250,000 bpd in May, 350,000 in June and 400,000 in July.
This improved outlook will bring back 2.1 million bpd to the market that is about a quarter of the crude Opec+ is still withholding after making deep cuts a year ago in response to the pandemic.
The next Opec+ ministerial meeting is scheduled for June 1 to review output levels for July and August.
Global oil prices will climb above $70 per barrel around mid-2021 as improved supply and demand fundamentals beginning May lead to substantial stock draws through to August, according to S&P Global Platts.
A recovery in the oil price will be critical to economies as industries begin to move back towards full operations.
The pandemic continues to cloud the demand for crude with surges in new coronavirus cases in India, Brazil and Japan. However, the global economic recovery continues, significantly supported by unprecedented monetary and fiscal stimulus, says Opec.
Editor
