(Bloomberg) — By Dina Khrennikova, Grant Smith, Salma El Wardany and Javier Blas
OPEC and its allies agreed to stick to their existing plan for gradual monthly oil-production increases after a brief video conference.
Ministers ratified the 400,000 barrel-a-day supply hike scheduled for October, delegates said. The group took less than an hour to reach an agreement, one of the quickest meetings in recent memory and a stark contrast to the drawn-out negotiations seen at the cartel’s previous talks in July.
“OPEC have proven once again that they can meet and do things seamlessly,” Christyan Malek, head of oil and gas and JPMorgan Chase & Co., said on Bloomberg TV. “It’s likely that harmony is going to be utilized” to respond flexibly to any further shifts in the market over the coming year, he said.
With crude prices mostly recovered from their mid-August slump and the supply outlook relatively tight for the rest of the year, the group has little reason to change the established schedule of gradual monthly supply hikes.
West Texas Intermediate crude was 1% lower at $67.85 a barrel at 11:34 a.m. in New York.
The Organization of Petroleum Exporting Countries and allies including Russia are in the process of rolling back the unprecedented output cuts implemented at the depths of the Covid-19 crisis last year. About 45% of the idle supply has already been revived, and in July the group laid out a plan for gradually returning the remainder through to September 2022.
There were some questions about that schedule when oil markets wobbled over the summer as the resurgent pandemic threatened demand in China and the U.S. But fuel use proved resilient and OPEC-watchers had widely expected the group to stay on its current track.
“With the oil market still undersupplied, as gauged by falling oil inventories, and with oil demand still rising, but in an uneven way, OPEC+ sticks to its plan,” said UBS Group AG analyst Giovanni Staunovo.