Starting from next month, OPEC+ is set to reduce production cut to 7.2Mbpd from the current levels of 7.7Mbpd. Credit: Elise Aldram from Pixabay.

The Organization of the Petroleum Exporting Countries (OPEC), and allies including Russia, together known as OPEC+, has now agreed to increase oil production by 500,000 barrels per day (bpd) from January.

The latest decision was agreed at the 12th OPEC and non-OPEC Ministerial Meeting (ONOMM) held via video conference on 3 December.

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Starting from next month, OPEC+ is set to reduce production cut to 7.2Mbpd from the current levels of 7.7Mbpd.

In April, OPEC+ agreed to cut output by a record 9.7Mbpd in May and June. The Group later agreed to bring down the cuts to 7.7Mbpd from July through the end of this year.

In a press statement, OPEC stated: “In light of the current oil market fundamentals and the outlook for 2021, the Meeting agreed to reconfirm the existing commitment under the Declaration of Cooperation (DoC) decision from 12 April 2020, then amended in June and September 2020, to gradually return 2Mbpd, given consideration to market conditions.”

Furthermore, the participating countries of the DoC have decided to assess market conditions by holding monthly ONOMMs starting from January next year.

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Based on the market conditions, the countries will decide on ‘further adjustments for oil production for the following month’ with monthly adjustments set not more than 500,000bpd.

OPEC added: “The meeting also agreed to extend the compensation period established from the 11th ONOMM, and later amended in September 2020, for the period of January until the end of March 2021, to ensure full compensation of over-production from all DoC participating countries.”