OPEC Will Relax Crude Output Cuts, Betting On Rebound In Economic Growth

OPEC Will Relax Crude Output Cuts, Betting On Rebound In Economic Growth

In May, as the world's demand for crude oil cratered amid a wave of Covid-19 infections, the group of oil-producing nations known as OPEC and its allies began reducing their oil output by around 10% of total global oil production, desperate to arrest a historic slide in oil prices. 

Today OPEC and its Russia-led allies agreed to lift some of those output restrictions, saying that the world's demand for oil was beginning to recover. Starting in August, the countries will ease their collective output cuts to 7.7 million barrels per day (b/d), from the previous 9.7 million b/d that took effect in May, according to reports of the virtual meeting where OPEC delegates deliberated. The producer alliance plans to ratchet back output cuts further to 5.8 million b/d between January 2021 and April 2022. 

Prince Abdulaziz bin Salman, Saudi Arabia's oil minister and de facto head of OPEC, said that extra supply resulting from the cuts would be consumed by global demand growth. "Economies around the world are opening up, although this is a cautious and gradual process,“ he said. 

Bin Salman said that the cuts might only be reduced to 8 million barrels a day if Nigeria and Iraq, which have a