DUBAI: Oil prices rose on Friday after OPEC+, the alliance of oil producers led by Saudi Arabia and Russia, agreed to keep in place most of the production curbs that have been credited with the recent surge in the price of crude on global markets.
After a virtual meeting of energy ministers organized from the Organization of Petroleum Exporting Countries (OPEC) headquarters in Vienna, only Russia and Kazakhstan were allowed to increase output levels in April.
Saudi Arabia “rolled over” for another month the big 1 million barrel reduction that has kept markets balanced since the start of the year.
Oil prices rose more than 1 percent on Friday morning, extending gains from Thursday. Brent gained 83 cents, or 1.2 percent, to $67.57 in early London trade.
Saudi Energy Minister Prince Abdul Aziz bin Salman told ministers: “The right course of action now is to keep our powder dry, and to have contingencies in reserve to ensure against any unforeseen outcomes.”
The prince urged a continuation of the Kingdom’s “cautious and vigilant” policy toward oil supply.
Reflecting on continuing worries about the post-pandemic economic recovery, Prince Abdul Aziz said: “Before we take our next step forward, let us be certain that the glimmer we see ahead is not the headlight of an oncoming express train.”
The prince said: “There is no doubt that the global oil market has improved since we last met in January,” citing a high level of compliance — 103 percent — to the cuts agreed on last year at the height of the oil crisis.
But the recovery in oil demand was not complete.
“I have said for a long time that recovery in global oil demand is closely linked to vaccine acceptance and the speed at which these vaccines are being rolled out around the world,” Prince Abdul Aziz said. “The uncertainty surrounding the pace of recovery has not receded.”
Most OPEC+ countries backed the Kingdom’s cautious stance, but Russia and Kazakhstan were allowed to produce an extra 120,000 and 20,000 barrels a day for the next month because of the domestic need for fuel during the winter.
OPEC+ noted that since the historic meeting last April that turned around the collapse in oil demand, some 2.3 billion barrels of oil had been taken off the global market.
OPEC+ ministers said that while economic prospects and oil demand would remain uncertain in the coming months, the rollout of vaccines around the world would be a positive factor for the rest of the year, boosting the global economy and oil demand.
Brent crude, the global benchmark, jumped back above $65 a barrel as traders’ fears of a flood of oil hitting markets on April 1 proved unfounded.