Home Energy OPEC and allies agree to extend gradual production increase, oil price jumps

OPEC and allies agree to extend gradual production increase, oil price jumps


By Audrey Lotechukwu

TUE 01 JUNE, 2021-theGBJournal- OPEC and non-OPEC members Tuesday agreed to extend ‘’the very generous compensation period for overproduced volumes’’ until the end of September 2021 amid rebounding outlook for both the economy and oil demand.’’

The decision is seen as a boost for Nigeria whose plea last November for upward review of quota was turned down despite drastically falling revenue.

The country’s production level fell drastically in November 2020 to 1,329.000 b/day, rose marginally in December to 1, 375. 000 b/d and dropped off again to one of its lowest levels in January 2021 to 1,328.000 b/d.

The request for review of the baseline figure was predicated on the disagreements over the classification of the Agbami stream as crude rather than condensate. Production level has since climbed back to 1,548.000 b/d in April.

OPEC remains optimistic on its demand projection which it expects to grow by 6 mb/d to around 96.5 mb/d on average for the year, an increase of 6.6%.

‘’ In fact, we anticipate that demand will surpass 99 mb/d in the fourth quarter, which would put us back in the range of pre-pandemic levels,’’ Mohammad Sanusi Barkindo, OPEC Secretary General said in his remarks today at the Joint Ministerial Monitoring Committee (JMMC) meeting held virtually.

In April OPEC and its allies agreed to gradually increase production. The agreement today, marks the start of the second month of the stepped-up production increases amid what the Organisation say is a ‘’durable recovery.’’

Benchmark Brent Crude futures traded as high as $71.17 a barrel today, up by 2.7%. Oil prices also have climbed nearly 30% since January.

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