The Organization of Petroleum Exporting Countries (OPEC) is thinking of increasing supply of crude oil when they meet next week. This is on the back of the fact that, the resurgent pandemic has been reasonably curtailed and crude oil prices bounce back from its August slump.
The coalition led by Saudi Arabia and Russia is gradually restoring the vast amount of crude production halted during the pandemic, and will probably ratify the next monthly installment when it gathers on September 1, according to a Bloomberg survey of traders and analysts.
Crude markets faltered earlier this month as the resurgent pandemic threatened demand in China and the U.S.
But prices have since recovered after fuel use proved resilient to the latest coronavirus wave, giving the OPEC and its partners more breathing space.
“Uncertainties over the world economy and the growth recovery in China have largely peeled away,” said Ed Morse, head of commodities research at Citigroup Inc. “There’s good evidence that the bottom in oil prices was temporary and overdone, and if the recovery continues, OPEC+ would likely stick to the plan.”
The cartel has already restarted roughly 45 per cent of the unprecedented production volume shuttered last spring. Under a plan spearheaded by Saudi Energy Minister Prince Abdulaziz bin Salman, OPEC+ will return the rest in monthly increments of 400,000 barrels a day through to late 2022.
Seventeen of 22 traders, analysts and refiners surveyed by Bloomberg expected no change to this schedule at Wednesday’s meeting, meaning October’s hike will go ahead as planned.
The OPEC+ coalition’s careful stewardship of the oil market has kept prices high enough to support the revival of the global petroleum industry, and largely avoided the kind of spike that could threaten the world’s economic recovery.