After several substantial cuts in its oil production, OPEC+, an alliance of crude producers led by Saudi Arabia is expected to increase oil production starting in August as signs of returning demand to normal levels emerge following to ease of COVID-19 related lockdowns.
Key members of the Organization of the Petroleum Exporting Countries and its Russia-led allies are set to meet via web conference this week to discuss the group’s current and future production.
Earlier in April, Saudi Arabia, the world’s largest oil exporter, led a push that saw the 23 member oil producers group reduced its combined output by 9.7 million barrels a day, as the pandemic led to a collapse of oil demand.
As the COVID-19 related lockdowns is eased across nations, Saudi Arabia and most coalition members now support loosening of the curbs. As per a Saudi proposal, the so-called OPEC+ group would limit its current curbs by 2 million barrels a day to 7.7 million barrels a day.
The colalition’s relative optimism coincides with a report from the International Energy Agency published last week showing the worst effects of the coronavirus on global oil demand have passed but will continue to echo as the market slowly recovers in the second half of 2020.
The OPEC+ has been gradually increasing production cuts since 2016 to meet the increasing competition from U.S. oil producers.