Opec+ likely to proceed with planned May oil output hike amid steady prices

Opec+ will likely stick to its plan to raise oil output for a second consecutive month in May, four sources told Reuters, amid steady oil prices and plans to force some members to reduce pumping to compensate for past overproduction. 

Opec+ is a group that includes Opec and allied producers led by Russia, and pumps over 40 per cent of the world's oil. The group is scheduled to raise output by 135,000 barrels per day in May.   

That would be the second monthly increase under a plan to unwind some of the millions of barrels per day of cuts the group has had in place since 2022. 

The group is simultaneously attempting to raise output targets for members that have been disciplined in meeting their previous targets, while pressuring other producers that have exceeded their targets to rein in output and pump below target for a time to compensate. 

On March 20, the group said seven members will make additional monthly reductions from this month until June 2026. 

These cuts to make up for earlier pumping above agreed levels are, on paper, larger than the monthly production hikes. 

The compensation cuts should hopefully make it easier for the group to continue with its plan for monthly hikes, one Opec+ delegate said. Three others told Reuters that they expected the schedule for hikes to continue from May. 

All sources declined to be identified by name due to the sensitivity of the matter. Opec and Saudi Arabian and Russian authorities did not immediately reply to Reuters requests for comment. 

International benchmark Brent crude traded above $72 a barrel on Monday. On March 5, Brent fell to almost $68, the lowest since December 2021, two days after Opec+ decided to proceed with April's output hike. 

Amrita Sen, founder of Energy Aspects, said the consultancy believed the unwinding of the cuts can proceed given low crude inventories, the upcoming summer season when oil demand increases, and a drive to increase compliance with the cuts. 

Opec+ has been cutting output by 5.85 million bpd, equal to about 5.7 per cent of global supply. The group has agreed on a series of steps since 2022 to support the market. 

An Opec+ ministerial committee, with the power to recommend to the larger group changes in production policy, is scheduled to meet on April 5. 

Earlier this month, Russian Deputy Prime Minister Alexander Novak said Opec+ could reverse the output hike decision after April if there are market imbalances.     

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