OPEC+ agreed on Thursday to gradually ease its oil output cuts from May, sources said, after the new U.S. administration called on Saudi Arabia to keep energy affordable, mirroring Donald Trump’s practice of calling OPEC’s leader over oil policy.
The group, which has been implementing deep cuts since oil prices collapsed in 2020 due to the coronavirus crisis, agreed to ease production cuts by 350,000 barrels per day (bpd) in May, another 350,000 bpd in June and further 400,000 bpd or so in July.
It was not immediately clear whether Saudi Arabia would ease up on its own voluntary cuts of 1 million bpd, which it has been implementing in addition reductions under the OPEC+ deal. A source said Riyadh was continuing to review its position.
Under Thursday’s deal, oil cuts implemented by OPEC+ would be just above 6.5 million bpd from May, compared with existing curbs of slightly below 7 million bpd in April.
Kazakhstan, a member of OPEC+, confirmed that it would produce more oil in May and June, but did not give figures for the broader group.
Brent crude, which slipped on news of the deal, was still trading above $ 62 a barrel, still more than 20% up on the start of the year and not far from this year’s high around $ 71.
“We reaffirmed the importance of international cooperation to ensure affordable and reliable sources of energy for consumers,” Jennifer Granholm, the new energy secretary appointed by U.S. President Joe Biden, said on Twitter after her call with Saudi Energy Minister Prince Abdulaziz Bin Salman.
News of the call coincided with signs of a changing mood in the informal discussions between members of the Organization of the Petroleum Exporting Countries, Russia and their allies, the group known as OPEC+, although it was not clear if Granholm’s intervention was the catalyst.
A few days before Thursday’s talks, OPEC+ delegates had said the group would likely keep most existing cuts in place, given uncertainty about the demand outlook amid a new wave of coronavirus lockdowns.
But in the 24 hours before the meeting started, sources said discussions had shifted to a possible output increase.
Prince Abdulaziz opened the meeting by saying the group should maintain a “cautious stance,” while Russia’s Deputy Prime Minister Alexander Novak offered a more bullish overview saying the global economy was recovering and fuel demand was rising.
In the past, Trump had used his influence to force Saudi Arabia to adjust policy. When prices spiked, he insisted OPEC raise production. When oil prices collapsed last year, hurting U.S. shale producers, he called on the group to cut output.
Until this week, Biden’s administration had refrained from such an approach, keep more of a distance from Riyadh and imposing sanctions on some Saudi citizens over the 2018 murder of Jamal Khashoggi.
Even when OPEC+ decided on March 4 to keep steady output, triggering a price rise, the White House had made no direct comment.