OPEC+ Agrees to Maintain Production Cut Easing Until July... International Oil Prices Reach 2-Year High

by Paek Jongmin

Published 02 Jun.2021 00:20(KST)

[Asia Economy New York=Correspondent Baek Jong-min] The Organization of the Petroleum Exporting Countries (OPEC) and OPEC+, including Russia, have agreed to maintain their policy of easing production cuts until July despite the expansion of oil demand. International oil prices rose again on this news.

According to Bloomberg News, on the 31st (local time), OPEC+ stated in a press release after their regular meeting that they "reaffirmed their existing commitment to easing production cuts" and that "the pace of production will be determined according to market conditions." AFP reported that the decision regarding production volume in August was postponed.

[Image source=AP Yonhap News]

Previously, OPEC+ decided at a meeting to gradually increase oil production by progressively reducing the agreed production cuts over three months starting in May. Saudi Arabia also voluntarily decided to gradually reduce its daily production cut of 1 million barrels.

In May, production was set to increase by 600,000 barrels per day (OPEC+ 350,000 barrels and Saudi Arabia 250,000 barrels), in June by 700,000 barrels per day (OPEC+ 350,000 barrels and Saudi Arabia 350,000 barrels), and in July by 881,000 barrels per day (OPEC+ 441,000 barrels and Saudi Arabia 400,000 barrels).

The total daily production increase by OPEC+ over the three months from May to July is 2,181,000 barrels.

OPEC+ had previously cut production sharply last year in response to the rapid decline in oil demand caused by the COVID-19 pandemic.

Following OPEC+'s decision, international oil prices surged again, reaching their highest levels in two years. Brent crude rose 2.7% to $71.17 per barrel, and West Texas Intermediate (WTI) increased 3% to $68.65 per barrel.