Oil climbs to near 14-month high as OPEC maintains output cuts

Oil prices have risen to the highest levels in nearly 14 months after OPEC and Russia decided against further reducing production cuts planned for April.

Brent crude increased by more than 5% to US$67.86 a barrel following the announcement after OPEC and its key oil producing allies (known as OPEC+) convened to discuss ongoing supply policy. US West Texas Intermediate also rose to $64.8 a barrel.

Despite seeing prices return to pre-pandemic levels in the first two months of 2020, Saudi Arabia’s oil minister Prince Abdulaziz bin Salman urged producers to remain cautious amid lingering market uncertainty.

“Let us be certain that the glimmer we see ahead is not the headlight of an oncoming express train,” he reportedly said. “The right course of action now is to keep our powder dry and to have contingencies in reserve to ensure against any unforeseen outcomes.

“When you have this unpredictability and uncertainty [I believe in] taking things in a more precautionary way,” Salman added after the meeting had concluded.

OPEC+ agreed to record supply cuts of almost 10 million barrels per day (bpd) last April, when the collapse in demand due to lockdown travel restrictions drove the oil price to an 18-year low.

The cuts have been reduced to 7 million bpd and will remain at that level next month after OPEC+ decided against a collective 500,000 bpd increase in supplies. Russia and Kazakhstan have been allowed a small production raise of 150,000 bpd together next month.

Saudi Arabia will also maintain its own voluntary extra cut of 1 million pbd for another month. These barrels will be brought back to the market gradually, the kingdom said.