© Reuters. File photo: In this illustrated picture on April 14, 2020, a 3D printed oil pump jack can be seen in front of the OPEC logo displayed. REUTERS/Dado Ruvic/Illustration/File Photo
Authors: Rania El Gamal, Olesya Astakhova and Dmitry Zhdannikov
Moscow/Dubai/London (Reuters)-OPEC+ ministers will meet on Sunday to try again to agree on a rapid increase in oil supply in response to soaring oil prices as the global economy recovers from the coronavirus pandemic.
The organization, which includes allies such as OPEC countries and Russia, failed to resolve differences between Saudi Arabia and the United Arab Emirates (UAE) regarding new production policies earlier this month.
OPEC+ agreed to cut production by nearly 10 million barrels per day last year to cope with the decline in demand caused by the pandemic, and gradually reduced its output to around 5.8 million barrels per day.
The group originally planned to further reduce production cuts by 2 million barrels per day from August to December 2021, as oil prices have climbed to a 2-1/2 year high [O/R].
An OPEC+ source told Reuters on Sunday that OPEC+’s major oil-producing countries have reached a preliminary agreement to gradually increase oil production until December 2021 and extend the overall agreement to the end of 2022, but some details have not yet been agreed.
Although both Riyadh and the UAE support an immediate increase in production, the UAE opposes Saudi Arabia’s idea of extending the overall supply management agreement from the current plan to December 2022, which will end in April 2022.
The UAE argues that if the agreement is to be extended, it hopes to obtain a higher production quota.
According to three OPEC+ sources, production quotas for the UAE and other member states such as Iraq and Kuwait will be increased on Sunday.
Producers need to decide when to set these higher output quotas, the baseline. Sources told Reuters that the UAE may see its benchmark daily output increase from the current 3.168 million barrels to 3.65 million barrels in April 2022.
It’s unclear which month OPEC+ will release more oil to the market-August may be difficult because Saudi Arabia has already set an official price for its oil, and releasing additional barrels may allow existing customers feeling anxious.
OPEC said that Sunday’s meeting will be held in a virtual way and will start at 1000 GMT.
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