Oil prices jump as OPEC+ keeps production largely steady, Saudi Arabia continues voluntary cut

LONDON — A group of some of the world’s most powerful oil-producing nations will meet on Thursday to discuss the next phase of production policy amid the ongoing coronavirus crisis.

OPEC and its non-OPEC partners, an energy alliance sometimes referred to as OPEC+, will convene via videoconference from 1 p.m. London time. A press conference is scheduled to take place following the conclusion of the meeting.

Analysts broadly expect OPEC+ to reverse some of the output cuts it made last year, although oil prices climbed higher on speculation that the group may decide against increasing supply.

International benchmark Brent crude futures traded at $64.34 a barrel during morning deals, up more than 0.4%, while U.S. West Texas Intermediate (WTI) crude futures stood at $61.48, around 0.3% higher.

Crude futures have soared to pre-virus levels in recent weeks, driven higher by substantial OPEC+ production cuts and the mass rollout of Covid-19 vaccines in many high-income countries.

OPEC’s de facto leader Saudi Arabia has publicly encouraged allied partners to remain “extremely cautious” on production policy, warning the group against complacency as it seeks to ensure a full oil market recovery.

Non-OPEC leader Russia, meanwhile, has indicated it wants to push ahead with a supply increase, claiming last month that the market has already balanced.

Energy analysts told CNBC earlier this week they expect OPEC+ to discuss allowing as much as 1.3 million barrels per day back into the market for April and perhaps beyond.

“Characteristic of the typical divisions within OPEC+, the meetings will be home to passionate debate reflecting quintessentially different views and interests. Saudi Arabia remains the core force behind the market management strategy and is by far the most cautious out of all member states,” analysts at Eurasia Group said in a research note.

“Complex and contradictory dynamics that have emerged in the last few days will complicate decision-making, but on balance the most likely outcome is tapering by about 1 million bpd, which would include a partial rollback of Saudi Arabia’s earlier 1-million-bpd cut.”

OPEC+ initially agreed to cut oil production by a record of 9.7 million barrels per day last year, before easing cuts to 7.7 million and eventually 7.2 million from January.

OPEC kingpin Saudi Arabia has since taken on voluntary cuts of 1 million from the beginning of February through March.

Ahead of Thursday’s highly anticipated meeting, OPEC Secretary General Mohammed Barkindo stressed the need to remain cautious as several ministers pushed for the loosening of production quotas.

He warned the Covid crisis still posed downside risks to the global economy and the distribution of vaccines, which favor the world’s richest nations, may lead to an uneven recovery.