By Brai Odion-Esene, SW4 Insights for Mace News
WASHINGTON (MaceNews) – Major oil-producing countries Thursday voted to maintain limits on their collective output levels for another month, arguing that the still-cloudy global economic outlook requires a prudent approach.
“The Meeting recognized the recent improvement in the market sentiment by the acceptance and the rollout of vaccine programs and additional stimulus packages in key economies, but cautioned all participating countries to remain vigilant and flexible given the uncertain market conditions, and to remain on the course which had been voluntarily decided and which had hitherto reaped rewards,” the OPEC-plus group said in a statement.
The gathering approved a continuation of March production levels for April, with the exception of Russia and Kazakhstan, who will be allowed to increase production by 130,000 and 20,000 barrels per day respectively, “due to continued seasonal consumption patterns.”
“We’ve elected to extend the voluntary cuts” to demonstrate the group’s cautious outlook, Saudi Arabia’s Energy Minister Abdulaziz Bin Salman said during a press conference after the meeting concluded, saying the minsters chose to be “prudent” with their decision.
“The only thing certain to day is uncertainty,” he warned.
“I belong to the school of being conservative and proceeding in a more precautionary way … prudence dictates caution,” Bin Salman said – arguing that it would not have been wise to dive in headfirst and raise production prematurely when the economic outlook remains “so uncertain.”
“I’ll believe it when I see it,” Bin Salman said, citing the unpredictable nature of the public health crisis as well as past instances when analysts predicted the worst was over, and missed the mark.
Once global oil inventory levels return to the range last seen between 2015 and 2019, “that is comforting,” Bin Salman said, adding it is this benchmark – not oil prices – that will guide his decision-making.
In February, Saudi Arabia had announced voluntary additional supply reduction of 1 million bpd for February and March to maintain oil market stability, and the oil heavyweight said it will extend those cuts to April as well.
And when the time comes for Saudi Arabia to return that 1 million bpd back in the oil market, it will be a gradual and phased-in process, Bin Salman said, spread out over months rather than an abrupt reversal.
The decision will be based on “what we (Saudi Arabia) see that the market requires, and we are not in a hurry to bring it forward … we are cautious.”
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Contact this reporter: brai@macenews.com.
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