Oil price soars as OPEC+ agree to keep production cuts in place
March 4, 2021
The US oil benchmark, WTI crude, jumped early on Mar. 4 to above $64/bbl, soaring by more than 5%, after OPEC and allied countries (OPEC+) decided to leave most oil production cuts in place next month. Brent Crude prices jumped above $67/bbl, up by 5%.
OPEC+ had been debating whether to restore as much as 1.5 million b/d of output. But as Saudi Arabia advocated for production restraints to keep prices supported, members agreed to hold steady at current levels—with the exception of modest increases granted to Russia and Kazakhstan.
Meantime, Saudi Arabia will maintain its 1 million b/d voluntary production cut, saying it is in no hurry to bring back the supply.
Russia and Kazakhstan secured exemptions from the deal, allowing them to boost output by 130,000 and 20,000 b/d in April, respectively, due to continued seasonal consumption patterns. The two nations were granted similar allowances for February and March.
As oil demand is recovering amid the rollout of vaccines, the OPEC+ decision is signaling a tighter crude market in the months ahead. However, higher crude prices could spur additional drilling activity by US shale explorers. Domestic oil rigs are already at the highest since May 2020.
OPEC+ will meet again on Apr. 1 to discuss production levels for May, according to the statement.
