By Adedapo Adesanya
The Brent crude rose by more than 4 per cent or $2.45 on Tuesday to sell at $53.54 per barrel as members of the Organisation of the Petroleum Exporting Countries and their allies (OPEC+) agreed to push back the expected production increase until next month.
Also at the market yesterday, the price of the West Texas Intermediate (WTI) crude futures moved up by 4.77 per cent or $2.27 to trade at $49.89 per barrel.
Overall, the group has volunteered to withdraw from global markets 7.125 million barrels per day in February instead of the initial 7.2 million barrels per day and in March, 7.05 million barrels per day would be taken off, according to statement issued at the end of the first ministerial meeting of the year.
Members of the oil cartel and their partners also gave concessions to Russia and Kazakhstan.
Saudi Arabia will make additional, voluntary oil output cuts of one million barrels per day (bpd) in February and March as part of the deal under which most OPEC+ producers will hold production steady in the face of new coronavirus lockdowns.
The OPEC leader is going beyond its promised cuts as part of the OPEC+ group of oil producers to support both its own economy and the oil market, Energy Minister Prince Abdulaziz bin Salman said on Tuesday.
However, Russia and Kazakhstan will produce more oil over the coming months under the deal. The two nations will add a combined 75,000 barrels per day to the market in both February and March.
The move follows two days of talks among OPEC+ producers that will see most members hold output steady next month.
The decision represents a compromise between two of the biggest oil producers, Russia and Saudi Arabia, because the former had wanted to raise overall crude output by 500,000 barrels per day starting in February.
The group initially failed to agree on production levels for February during a meeting on Monday and this depressed prices.
New variants of the coronavirus that appear to be more transmissible have been detected in many of the world’s biggest economies, raising fears that governments may be forced to impose restrictions on travel and public life, a decision that affects oil demand.
Demand for crude took a hit under the effects of the virus in 2020 and oil-producing nations have been trying to adjust output accordingly to underpin prices.
Prices also regained support even as tension simmered in the Middle East following Iran’s seizure of a South Korean vessel on Monday.
The OPEC producer said the Asian country owed it $7 billion following a US sanction and the possibility of its escalation had driven oil prices up.
Dipo Olowookere