© Reuters. FILE PHOTO: On this illustration image dated April 14, 2020, a 3D printed oil pump lifter can be seen in front of the displayed OPEC logo. REUTERS / Dado Ruvic / Illustration / File Photo
By Rania El Gamal, Olesya Astakhova and Ahmad Ghaddar
MOSCOW / DUBAI / LONDON (Reuters) – OPEC + ministers on Sunday agreed to hike oil supplies to cool prices from August, which have soared to 2-1 / 2-year highs as the global economy drifts away from the coronavirus pandemic recovered.
The group, which includes OPEC nations and allies like Russia, decisively agreed to new production allocations starting in May 2022 after Saudi Arabia and others agreed to a request from the United Arab Emirates (UAE) that threatened the plan.
“We are satisfied with the deal,” said the United Arab Emirates’ energy minister, Suhail bin Mohammed al-Mazroui, at a press conference. Saudi Energy Minister Prince Abdulaziz bin Salman declined to answer questions about the deal.
OPEC + cut production by a record 10 million barrels per day (bpd) last year amid a pandemic-induced slump in demand and plummeting prices. It gradually restored some supply to leave it with a reduction of about 5.8 million bpd.
From August to December 2021, the group will increase the supply by an additional 2 million bpd, or 0.4 million bpd per month, OPEC said in a statement.[O/R] The aim is to allow the cuts to run out completely by around September 2022.
The group had agreed to extend their overall pact from an earlier planned date in April 2022 to the end of 2022 to leave more leeway should the global recovery stall due to new virus variants.
While both Riyadh and the UAE had supported an immediate increase in production, the UAE had spoken out against the Saudi idea of extending the pact until December 2022 without receiving a higher production quota.
To overcome the differences of opinion, OPEC + agreed new production quotas for several members from May 2022, including the United Arab Emirates, Saudi Arabia, Russia, Kuwait and Iraq.
In the United Arab Emirates, base production, from which cuts are calculated, will increase from 3.168 million today to 3.5 million bpd from May 2022.
Saudi Arabia and Russia will see their baselines increase from the current 11 million to 11.5 million bpd each. Iraq and Kuwait will see their baselines rise 150,000 bpd each.
Prince Abdulaziz said Nigeria and Algeria could also see their baselines revised.
He said OPEC + would adjust its policies if Iranian oil returns to the market, if the country reaches an agreement with world powers on its nuclear program.
It is estimated that once the deal is reached and Western sanctions lifted, Iran will be able to add about 1.5 million bpd to global supply.
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