Days after OPEC + greed to gradually increase production and add about 2 million bpd to world supply by July, Saudi Energy Minister Prince Abdulaziz bin Salman hinted that the cartel it could change course if necessary.
Bloomberg quotes the official as saying there was nothing in the oil markets that would disturb the cartel, but oil ministers will continue to meet every month and will be willing to change their stain if asked to do so.
It may be asked at some point unless the pandemic situation changes drastically to improve. Infections are on the rise in many parts of Europe, the number of cases is still high in Brazil and India, and the deployment of vaccines worldwide is not as fast as many would like.
On the other hand, the U.S. economy will soon be on the verge of firing all cylinders, according to most economists and analysts, thanks to the generous federal stimulus program and the rapid progress of vaccinations.
Still, concerns about demand remain, including OPEC, as evidenced by Bin Salman’s suggestion that the cartel could change course if necessary. When OPEC + agreed to start increasing production, it did so with expectations that demand would rebound globally in a few months.
Even if it does, there will be more oil entering the world market from Libya, and if the United States and Iran reach an agreement on the nuclear deal, there will also be much more Iranian oil.
Oil prices have already been constrained by uncertainty related to the pandemic of the world economy and any additional pressure is pushing them down, which would cause OPEC to act, which it probably will.
In some good news for the cartel, the Energy Information Administration has revised its forecast for U.S. oil production this year from 11.15 million bpd last month to 11.04 million of bpd, due to the consequences of Texas Freeze.
By Irina Slav for Oilprice.com
More highlights from Oilprice.com: