OPEC+ Decides to Maintain Production Cut Easing, Citing Limited Impact from India... WTI Up 1.7%

"Clear Recovery in US Demand"... Highlighted Over India Situation
Agreement to Increase Production by 2.18 Million Barrels per Day from May to July

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The Organization of the Petroleum Exporting Countries (OPEC) and the coalition of major oil-producing countries including Russia, known as OPEC Plus (OPEC+), decided to maintain their existing policy of easing production cuts despite concerns over the COVID-19 situation in India, leading to a simultaneous rise in international oil prices. This is interpreted as optimism stemming from the expectation that the impact of reduced oil demand in India will be limited, while the recovery in demand in the United States will be very strong.

According to foreign media including the Associated Press (AP) on the 27th (local time), OPEC+ member countries held a ministerial monitoring committee (JMMC) meeting, which is scheduled monthly, and announced that they would maintain the existing decision to implement easing measures on production cuts starting next month. Accordingly, OPEC+ countries agreed to increase oil production by 2.18 million barrels per day over the three months from next month through July.

Previously, the international crude oil market had been concerned that oil-producing countries might partially lift the easing of production cuts due to the resurgence of COVID-19 reinfections in India. India is the world's third-largest oil importer, and its healthcare system has been severely overwhelmed due to the resurgence caused by the triple mutant variant of the coronavirus. On the same day, India reportedly recorded more than 320,000 new confirmed cases and 2,771 deaths.

However, OPEC+ viewed the impact of the situation in India as limited and instead looked positively at the recovery in the United States. Bloomberg quoted an anonymous OPEC+ delegation member saying, "Although the spread of COVID-19 in India could reduce oil demand by 350,000 barrels per day, the recovery in demand in the United States and China is outweighing this." OPEC+ stated that global oil demand this year is expected to increase by up to 6 million barrels per day compared to last year.

International oil prices also closed higher on the news that oil-producing countries would maintain their policy of easing production cuts. On the same day at the New York Mercantile Exchange (NYMEX), West Texas Intermediate (WTI) crude oil prices closed at $62.94 per barrel, up $1.03 (1.7%) from the previous session. North Sea Brent crude was trading at $66.16, up $0.32 (0.49%).

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