Oil Prices Surge as OPEC Extends Production Cuts
Despite recent price surges, a group of major oil producers has agreed to extend production cuts for another month, choosing to limit supply until the global economic recovery is firmly established.
The Organization of the Petroleum Exporting Countries (OPEC) and allied producers said on Thursday that they would largely roll over production cuts during the month of April. Russia and Kazakhstan were the only countries granted exemptions to increase their output.
The group agreed in January to keep production steady for the months of February and March. At that time, Saudi Arabia surprised markets by pledging to cut its production by an extra 1 million barrels per day.
On Thursday, Saudi Arabia agreed to extend its cut through April.
Recent rising prices have made producers more confident that production cuts have put the market on a solid footing following their pandemic crash.
At the moment, the future of the oil market and energy industry is still uncertain. Crude futures have now recovered all the ground lost during the early months of the pandemic, while Brent is slowly recovering its losses.
Last year, OPEC slashed output by a record-shattering 9.7 million barrels per day.
The International Energy Agency expects world oil demand to grow by 5.4 million barrels per day in 2021. It is expected that demand will reach 96.4 million barrels per day, recovering around 60% of the volume lost over the past year.
