* Oil reaches $81, highest in 4 years
Lagos — The Organization of the Petroleum Exporting Countries, OPEC, and its allies in the OPEC+ fold agreed on Monday to stick to their existing plan for gradual monthly oil-production increases. The decision came after a brief video conference by OPEC ministers.
The ministers ratified the 400,000 barrel-a-day supply hike scheduled for October after less than an hour of talks. It is one of the quickest meetings of the group in recent times and a sharp departure from the drawn-out negotiations seen in July.
Oil prices soared on news of the decision, with global benchmark Brent reaching above $81 a barrel, the highest in 4 years.
In sticking to the existing agreement OPEC+ aims for a gradual increase in oil output.
Monday’s decision by the ministers came amid calls for the oil group to further loosen the taps in order to cool heated prices.
“OPEC have proven once again that they can meet and do things seamlessly,” Christyan Malek, head of oil and gas and JPMorgan Chase & Co., said on Bloomberg TV. “It’s likely that harmony is going to be utilized” to respond flexibly to any further shifts in the market over the coming year, he said.
OPEC and allies, including Russia, are in the process of rolling back the unprecedented output cuts implemented at the depths of the COVID-19 crisis last year. About 45% of the idle supply has already been revived, and in July the group laid out a plan for gradually returning the remainder through to September 2022.
With crude prices mostly recovered from their mid-August slump and the supply outlook relatively tight for the rest of the year, the 23-nation coalition had little reason to change the established schedule of gradual monthly supply hikes, despite a request from the White House to revive output faster.
There had been some doubts about the plan when oil markets wobbled over the summer as the resurgent virus threatened demand. But fuel use proved resilient, with total oil products supplied in the U.S. rising to a record in late August.
“While the effects of the COVID-19 pandemic continue to cast some uncertainty, market fundamentals have strengthened and OECD stocks continue to fall as the recovery accelerates,” OPEC+ said in a statement.
Data presented to ministers reveal a fresh challenge for Saudi Arabia and its partners in 2022. Markets were projected to tip back into surplus next year, with an average oversupply of 1.6 million barrels a day. However, the projections assume the group will restore all of the almost 6 million barrels a day of output that remains offline — an unlikely feat as many countries may struggle to reach their full targets.