London—The world’s leading oil producers on Wednesday upheld a deal reached just over a month ago to boost output gradually despite US pressure to go further.
After weeks of wrangling, members of the Organization of Petroleum Exporting Countries along with allies such as Russia—known collectively as OPEC+—agreed in July to raise output by 400,000 barrels per day (bpd) from August.
The move is aimed at supporting a global economic recovery, which has been battered by the coronavirus pandemic—a crisis that sent oil demand plummeting last year.
The videoconference on Wednesday of the 23 members of OPEC+ lasted less than an hour to “reaffirm the decision” taken in July, according to a statement by the group.
“While the effects of the COVID-19 pandemic continue to cast some uncertainty, market fundamentals have strengthened,” it said, adding the next meeting would be held on October 4.
US national security adviser Jake Sullivan said last month that the production boost agreed in July was “simply not enough” to fuel a global recovery.
But analysts had widely predicted a meeting with no surprises.
Before the meeting, Russian Deputy Prime Minister Alexander Novak said the OPEC+ deal had succeeded to eliminate the excess supply, which “had accumulated during the period of falling demand.”
“It is now important to maintain this balance and to coordinate production and demand as the market recovers,” he was quoted by the TASS news agency as saying.
Kpler analysts said the latest decision “makes sense.”
“Given that policy is unchanged, we continue to expect that the gradual return of OPEC+ oil supply in the coming year will put downward pressure on prices,” Caroline Bain of Capital Economics said.
Oil prices—which had already been sliding owing to concerns about the global economy—plummeted in April 2020 as coronavirus spread around the world and hit global consumption, transport, and supply chains.
OPEC+ then decided to withdraw 9.7 million bpd from the market and to gradually restore supplies.
Benchmark oil prices rebounded as a result to reach two-and-a-half-year highs.
Since May this year, OPEC+ members have raised oil output incrementally with the aim of eventually returning to pre-pandemic production levels.
The grouping will “assess market developments” in December, OPEC said in July. It also agreed to extend a deadline on capping output from April next year to the end of 2022.
In a rare challenge to OPEC leader Saudi Arabia in July, the United Arab Emirates only agreed to the deal after a compromise was reached to adjust its output quotas next May, together with several other countries, meaning their actual cuts will be less.
The main international oil contracts have been trading around $70 per barrel.
But the market remains nervous with COVID-19 infections and the Delta strain on the rise and governments mulling future lockdowns.