A group of oil producers led by Saudi Arabia and Russia agreed to continue unwinding steep cuts they made at the start of the pandemic, according to people familiar with the discussions, as economic reawakenings around the world boost demand for crude and an assortment of other commodities.
OPEC+, as the group of producers calls itself, agreed Tuesday to a previously planned output increase of about 450,000 barrels a day, starting next month, according to these people. Saudi Arabia, meanwhile, agreed to continue easing separate, unilateral cuts of one million barrels a day that it put in place earlier this year, these people said.
In April, the group agreed to hike output by more than two million barrels a day by the end of July, bringing cumulative additions over the past year to some four million barrels a day. That is a big chunk of the 9.7 million barrels a day the group agreed to cut early in 2020, when the new coronavirus first started shutting down economies, sapping global crude demand and sinking prices.
Now, with infection rates generally in check in much of Asia and China—the world’s biggest oil consumer—and vaccine drives in the U.S. and Europe plowing ahead, the Saudi-led Organization of the Petroleum Exporting Countries and a group of non-OPEC producers led by Russia are betting markets are ready again for more oil.
Ahead of the widely expected move, Brent crude, the international benchmark, rose more than 2%, passing $71 a barrel, on track for its highest close since May 2019. West Texas Intermediate futures were up almost 3% at over $68 a barrel. The U.S. gauge on Tuesday crossed its highest level since October 2018.