OPEC faces COVID-19 challenge, agrees to risk more oil
The Organisation of Petroleum Exporting Countries (OPEC) is set to boost production level amid increasing cases of COVID-19 which threatens the recovery of oil price which crashed in April 2020.
OPEC had raised concerns regarding the high number of persons infected by the virus despite the distribution of COVID-19 vaccines. The organisation said the rising cases will affect the economy as well.
“The ministerial meeting emphasised, however, that COVID-19 cases are rising in a number of countries, despite the ongoing vaccination campaigns, and that the resurgence could hamper the economic and oil demand recovery.” OPEC and its allies said this during the 16th OPEC and OPEC-plus ministerial meeting on Tuesday.
Meanwhile, both organisations have agreed to increase production output by two million barrels per day in July 2021. Saudi Arabia will contribute the largest volume of barrels.
READ ALSO: OPEC commends Nigeria over ‘conformity’ with oil production cut
The decision to pump more crude was surprising amid rising cases in India, Brazil, and Japan, which might force them to enter a total lockdown, but according to S&P Global Platts, OPEC hope global economic recovery will outweigh the COVID-19 surge.
The Russian Deputy Prime Minister, Alexander Novak, had stated that there’s optimism in the oil market as demand has risen in largest consumer markets following low demand that trailed COVID-19 outbreak and lockdown measures.
The restriction on movements in 2020 and the oil price war between Russia and Saudi Arabia, had pushed oil price down to $20 in April last year, but since OPEC and its allies agreed to production cut in 2020, there have been a strong growth in oil price, which currently stands at $63.37.
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