An OPEC+ panel endorsed the oil producer group's current output policy at a meeting on Wednesday, leaving production cuts agreed last year in place amid hopes of higher Chinese demand and uncertain prospects for Russian supply. Ministers from OPEC+ countries met in a virtual gathering that sources said lasted less than 30 minutes.
OPEC+ has long taken a cautious approach in its decision-making, as it contends with market supply-demand fundamentals, pressure from international consumers to help ease the burden on households, and the need to incentivize further investment into spare capacity. OPEC+ agreed to cut its production target by 2 million barrels per day (bpd), about 2% of world demand, from November last year until the end of 2023 to support the market.
Why it matters
Oil fell at the start of the year but has rallied, supported by hopes that Chinese demand will rebound, although fears of global recession remain a drag on prices. Questions had risen whether prospective increases in Chinese demand could push the producers’ alliance to raise their output.