To revive the economy, OPEC+ closed an agreement this Sunday (18) to undo all the cuts made at the beginning of the pandemic, that is, the production of barrels of oil will return to full steam, being able to double over the next two years to 400 thousand barrels of oil per day
The Organization of the Petroleum Exporting Countries and allies led by Russia (OPEC+) reached an agreement to increase the production of barrels of oil over the next two years from current levels. Therefore, the cartel and other producers have committed to undoing all cuts made since the start of the new coronavirus pandemic as demand for oil and gas recovers and the economy heats up.
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Increase of 400 barrels in oil production
The commodity market was looking forward to the decision taken by OPEC+ this Sunday (18). The agreement allows for an expansion of the oil supply by 400 barrels per day until the end of 2022 and will enter into force in August.
The number came in line with broad expectations from investors and analysts. OPEC+ will again assess the state of the market in the last semester. Negotiations were suspended after the United Arab Emirates refused to sign a production increase in barrels of oil unless it was allowed to pump more of its own product under the group's quota system.
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Last week, Saudi Arabia, leader of OPEC, and the US reached an agreement to increase this quota next year, paving the way for another agreement at this Sunday's meeting.
Impacts of the pandemic on oil and gas production
In early 2020, when the first signs of the pandemic were taking place in the West, OPEC+ reduced oil production by 9,7 million barrels per day, equivalent to approximately 10% of demand for 2019.
Supply has since been restored by around 4 million barrels and the deal reached on Sunday calls for the rest of those cuts to be restored by the end of next year.
According to cartel projections, world demand for oil will increase by 3,3 million barrels per day, to an average of 99,9 million per day, in 2021, taking into account pre-pandemic demand levels.
For the chief executive of consultancy firm Qamar Energy in Dubai, Robin Mills, the outcome is essential for consumers in the short term. Despite this, the executive and other analysts estimate that pressure on prices will continue in response to the heating up of economies. According to Giovanni Stuanovo, commodities analyst at Swiss bank UBS, the market will be tight this summer.