Oil futures enjoyed a strong start to 2021, achieving a 5% rise on Tuesday. This marks the first occasion on which U.S. prices rose above $50 since February of last year.
This has led to an agreement being reached by the Organization of the Petroleum Exporting Countries to suppress production next month.
Saudi Arabia, a major player in OPEC+, decided to take on a larger reduction than most of its allies in this regard. Saudi Arabia energy minister Prince Abdulaziz bin Salman committed to cutting production of one million barrels per day, which would bring the new daily output to 8.125 million barrels.
Due to Saudi Arabia’s decision to take on a greater portion of this burden, partners such as Russia and Kazakhstan will be allowed to increase their own production rates by a combined 75,000 per day.
Bjornar Tonhaugen, head of oil markets at Rystad Energy, was a bit more skeptical about these changes. He contested that “Russia and Kazakhstan got away with increasing their output in February and March, while other OPEC members have to bite the bullet.”
