Oil prices rise as Opec+ agrees to gradually increase supply

The group will increase output by 250,000 bpd in May

FILE PHOTO: The OPEC logo pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria, September 28, 2016. REUTERS/Ramzi Boudina/File Photo
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Oil prices rose as Opec+ agreed to gradually increase production over the next three months, as the group bowed to pressure from producers to bring supply back to the market.

Brent, the international marker, jumped 1.32 per cent to $63.57 per barrel at 8.05pm UAE time. West Texas Intermediate, which tracks US crude grades, was up 1.93 per cent at $60.30 per barrel.

The alliance, led by Saudi Arabia and Russia, will convene monthly to consider increases in output "with every adjustment being no more than 500,000 barrels per day", Opec said in a statement on Thursday.

The group will increase output by 350,000 bpd in May and June and will add 450,000 bpd in July.

Saudi Arabia, which had supported the group's restrictions by volunteering to cut 1 million bpd until April, will phase out the curbs from May onwards.

Riyadh will cut 250,000 bpd in May, 350,000 bpd in June and 400,000 bpd in July.

Russia will not participate in the curbs in May but will spread its quota, equivalent to 39,000 bpd over a three-month period from June onwards.

Kazakhstan will also follow Russia's production cut timeline and will restrict 6,000 bpd from June.

Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman told reporters the group would bring back supply "gradually" and be "mindful of how the market may react".

"I wouldn't call it your full feet but [we're testing] our toe in the water and see how things may turn out to be," he said.

From July onwards, the group will follow a more "egalitarian" approach to distributing its production cuts, the minister said.

Earlier, Saudi Arabia expressed doubts of a recovery in oil markets, urging fellow producers to exercise caution ahead of the extraordinary ministerial meeting.

"Until the evidence of recovery is undeniable, we should maintain this cautious stance," Prince Abdulaziz said at the opening of the virtual meeting.

Opec+ had earlier deferred a planned increase in production of around 2 million bpd due to concerns over renewed lockdowns in several parts of the world.

The alliance will now cut 6.85 million bpd in May. Riyadh's voluntary commitment of 1 million bpd will expire at the end of the month.

Prince Abdulaziz earlier cited high levels of infection in the eurozone and renewed mobility restrictions as evidence of a volatile recovery.

"Steering the ship in these current conditions where different scenarios are playing out in various regions of the world requires a steady hand," he said.

"Continuing with this flexible approach will serve us best."