Top oil producers agree on output boost from Aug

Opec and its allies agreed to gradually boost oil supplies after Saudi Arabia and the United Arab Emirates resolved a dispute.

The cartel will boost output by 400,000 barrels a day each month from August until all of its halted output has been revived. The deal will also give Saudi Arabia, the UAE, Iraq, Kuwait and Russia higher baselines against which their production cuts are measured from May 2022, according to a statement from the group.

The truce will ease a looming supply squeeze and reduce the risk of an inflationary oil price spike. It also puts an end to a diplomatic spat that unnerved traders, as the fight between the two long-time allies risked unraveling the broader accord between the Organization of Petroleum Exporting Countries and its allies that has underpinned the recovery in crude prices.

“Opec+ is here to stay,” Saudi Energy Minister Prince Abdulaziz bin Salman told reporters after the meeting. “Consensus building is an art” and the group will continue to meet every month to closely monitor the market recovery, he said.

The multifaceted agreement means several things for the oil market. It gives consumers a clearer view of how quickly Opec+ will restore the 5.8 million barrels a day of production its still withholding, since making deep cuts last year in the initial stages of the pandemic.

The baseline adjustments won’t alter the pace of the 400,000 barrel-a-day monthly output increases when they take effect next year, Prince Abdulaziz said.