By Saket Sundria and Alex Longley
The extension of the existing limits is a victory for Saudi Arabia and Russia, which were deadlocked in a brutal price war just two months ago. OPEC+’s de-facto leaders showed their commitment to shore up oil markets globally, and even cajoled Iraq, Nigeria and other laggards to fulfill their promises to reduce production. Following the meeting, OPEC’s largest producer sharply hiked its official selling prices.
The supply cuts and a rebound in demand have helped oil prices double since April. China’s crude imports surged to a record high last month, while consumption in other major economies such as India is improving. Still, a sustained rebound in prices may be hampered by deteriorating relations between Washington and Beijing, a second wave of infections, or returning U.S. shale supply.
Following the new deal, Saudi Arabia pressed on by increasing some crude prices by the most in at least two decades. The hikes erased almost all of the discounts the kingdom made during its brief price war with Russia, with the steepest increases hitting July exports to Asia.
As OPEC met virtually over the weekend, Tropical Storm Cristobal was swirling over the Gulf of Mexico. Offshore drillers idled about a third of oil production, amounting to about 636,000 barrels of daily output, due to the storm, according to the Bureau of Safety and Environmental Enforcement. The storm has now crossed the coast.
Meanwhile, Libya’s biggest oil fields are gradually resuming production after a five-month shutdown due to civil war. Output will start at an initial 30,000 barrels a day at Sharara and it will take three months to return to full capacity, according to National Oil Corp. Supply from El-Feel also restarted on Sunday, according to a person with direct knowledge of the situation.