After weeks of uncertainty, oil markets witnessed stability as the OPEC+ members agreed on a phased deal that would put 500,000 barrels back on sale from next month.
According to the details, under the new phased deal, OPEC+ was due to put an extra 2 million barrels per day back onto global markets from next month.
Saudi Arabia wanted to wait and see how the global economy performed in the first part of the year, especially in light of the vaccines now becoming available. Moreover Russia was also wary of global economic conditions, but its private oil companies were keen to earn precious revenue from increased oil supply.
Oil markets reacted positively to the new deal, after uncertainty for the past few weeks with Brent nearing $50 a barrel – its highest level since March.
In addition to this, Energy experts are of the view that “In a very uncertain environment, it is important for OPEC+ to retain flexibility. The OPEC+ agreement, which extends to April 2022, provides sufficient clarity to the market while allowing for adjustment if market conditions dictate.”
They said that “The plan to make modest month increases in production makes sense. It doesn’t overwhelm the market, gradually regains some market share, and can be adjusted depending on progress in vaccines and other economic factors.”