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OPEC+ To Gradually Boost Oil Production Ahead Of Expected Summer Rebound In Demand

Saudi Energy Minister Abdulaziz bin Salman Al-Saud speaks during the fourth edition of the Future Investment Initiative (FII) conference at the capital Riyadh's Ritz-Carlton hotel on January 27, 2021. - Saudi Arabia opened a two-day Davos-style investment forum, with dozens of global policy makers and business tycoons lined up to speak at the largely virtual event amid the coronavirus pandemic. Only 200 of around 8,000 registered delegates attended in-person, while around 100 speakers are set to participate virtually with 50 present physically. Previous summits drew thousands of Wall Street titans and global policymakers. (Photo by FAYEZ NURELDINE / AFP) (Photo by FAYEZ NURELDINE/AFP via Getty Images)
Saudi Energy Minister Abdulaziz bin Salman speaks at an investment conference in Riyadh, Saudi Arabia, on Jan. 27. OPEC and its allies on Thursday decided to gradually boost oil production in anticipation of a rebound in crude demand over the summer.

Encouraged by vaccination programs and economic stimulus packages, OPEC and its allies are expecting a summertime resurgence in global oil demand and are planning to pump more crude as a result.The announcement on Thursday was a surprise to oil markets, which had anticipated output to hold steady. But it wasn't an unpleasant developent: while supply increases often push prices down, oil actually rose after the news of this apparent optimism. The deal between OPEC members and their allies, collectively called OPEC+, call for production to increase progressively in May, June and July. Meanwhile Saudi Arabia, over the same time frame, will gradually lift its voluntary cuts. Together the two changes will add some 2 million barrels of oil per day to global production by midsummer.The group will continue to meet monthly to determine if they need to change course. "We can freeze, we can increase, we can decrease," Saudi energy minister Abdulaziz bin Salman told reporters, jokingly referencing the movie Bend it Like Beckham to describe the cartel's ability to shift its trajectory. Crude prices cratered last year because of the coronavirus pandemic, and unprecedented production cuts by OPEC+ played a key role in pushing them back up. Prices are now north of $60, more than double what they were a year ago.Regina Mayor, global head of energy at KPMG, said ahead of the meeting that this track record is strengthening the OPEC+ alliance."Collectively they're seeing success in their efforts," she said. "So it's allowing them to stay more united." Copyright 2021 NPR. To see more, visit https://www.npr.org.