The Strategist

WSJ: Saudi Arabia to raise oil output from April

02/19/2021 - 02:43

Saudi Arabia plans to increase oil production in the coming months as oil prices are rising, writes The Wall Street Journal, citing sources.

In early January, Saudi Arabia announced a decision to cut oil production in February and March by 1 million barrels per day. According to the WSJ, it is set to announce the changes at the next OPEC + meeting in March. At the same time, it is not about a waiver of obligations, so the increase in production will not begin until April.

Oil prices this week have risen to values unreached since the beginning of the COVID-19 pandemic: for example, the price of Brent crude oil exceeded $ 65 per barrel for the first time since January last year. The growth was driven by the easing of lockdowns in many countries and the associated economic recovery, as well as record frosts in some US states, where this negatively affected the production of WTI crude oil. WSJ writes that the current plans of Saudi Arabia may still be revised if the situation changes. The country's authorities have not yet announced their intentions to OPEC.

According to the forecasts of the International Energy Agency, in the second half of the year, the recovery in oil demand will outstrip production, which will lead to a decrease in its reserves and may also raise oil prices. As the WSJ writes with reference to analysts' opinions, other oil producing countries may also move away from their earlier commitments to cut production, but this is unlikely to happen immediately after Saudi Arabia, as it cut production more actively than other countries.