Saudi Arabia will make additional, voluntary oil output cuts of one million barrels per day (bpd) in February and March as part of a deal under which most OPEC+ producers will hold production steady in the face of new coronavirus lockdowns.
Saudi is going beyond its promised cuts as part of the OPEC+ group of oil producers to support both its own economy and the oil market, Energy Minister Prince Abdulaziz bin Salman said on Tuesday.
The move follows two days of talks among OPEC+ producers that will see most members hold output steady next month.
Two producers – Russia and Kazakhstan – will be allowed to bump up their output by a combined 75,000 bpd in February and a further 75,000 bpd in March, Kazakhstan’s energy minister said.
Benchmark Brent oil was trading up about 5 percent at more than $53 per barrel at 1836 GMT.
Russia and Kazakhstan had pushed for the group to raise production by 500,000 barrels per day (bpd) for February, as it had done for January, while others wanted no increase.
An internal OPEC+ document dated Jan. 4 seen by Reuters highlighted bearish risks and stressed that “the reimplementation of COVID-19 containment measures across continents, including full lockdowns, are dampening the oil demand rebound in 2021”.
Saudi’s energy minister on Monday urged caution, noting still fragile fuel demand and the unpredictable impact of new variants of the coronavirus.
New variants of the coronavirus first reported in Britain and South Africa have since been found in countries across the world.
OPEC+ producers have been curbing output to support prices and reduce oversupply since January 2017.
As COVID-19 hammered demand for gasoline and aviation fuel and slashed Brent oil prices, OPEC+ was forced to boost its output cuts to a record 9.7 million bpd in mid-2020.
This month’s 500,000 bpd rise in output narrowed OPEC+ cuts to 7.2 million bpd.