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OPEC+ led by Saudi Arabia on Sunday agreed to a request from the United Arab Emirates to ease cuts by 2 mln bpd until year end. UAE, KSA, Russia, Iraq see output quota adjustment. Oil prices are near 2-1/2 year highs on pandemic economic recovery.

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In a statement OPEC+ ministers agreed on Sunday to boost oil supply from August to help soften prices that have have risen to 2-1/2 year highs as the global economy recovers from the coronavirus pandemic.

The OPEC+ group includes OPEC countries and Russia agreed new production allocations from May 2022 after Saudi Arabia and others agreed to a request from the United Arab Emirates (UAE) that had threatened the plan.

From August until December 2021 the group will increase supply by a further 2 million bpd or 0.4 million bpd a month, OPEC said in a statement. It aims to fully phase out cuts by around September 2022.

"We are happy with the deal," UAE's Energy Minister Suhail bin Mohammed al-Mazroui at the news conference.

Saudi Arabian energy minister Prince Abdulaziz bin Salman declined to answer questions on how the compromise was reached. UAE had objected to the Saudi idea to extend the pact to December 2022 without getting a higher production quota.

OPEC+ last year cut production by a record 10 million barrels per day (bpd) amid collapsing prices. From there it has gradually reinstated some supply to leave it with a reduction of about 5.8 million bpd as the oil prices recovered sharply. The group had agreed to extend their overall pact until the end of 2022 from an earlier planned date of April 2022, to leave more room for adjustment in case global recovery stalls due to new virus variants which are causing global havoc.

OPEC+ agreed new output quotas for several members from May 2022, including the UAE, Saudi Arabia, Russia, Kuwait and Iraq.

  • The UAE will see its baseline production, from which cuts are being calculated, increase to 3.5 million bpd from May 2022 from today's 3.168 million.
  • Saudi and Russia will see their baselines rise to 11.5 million bpd each from the current 11 million.
  • Iraq and Kuwait will see their baselines rise by 150,000 bpd each.
  • Prince Abdulaziz said Nigeria and Algeria could also see their baselines revised saying OPEC+ would adjust its policy if and when Iranian oil returned to the market if the country reached a deal with world powers over its nuclear programme.

Sources: Reuters, TC

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