OPEC+ agrees to increase production

RUSSIA / FSU POLITICS - In Brief 04 Dec 2020 by Alex Teddy
On December 3 OPEC+ said that oil output will increase in January 2021 by 500 000 bpd. That is a change to its previously agreed timetable for quota relaxation.Saudi Arabia had wanted a 2 million bpd increase. Russia wanted to only raise production once oil prices reached close to their pre-coronavirus levels. Russia needs an oil price of over USD 40 per barrel for its budget to break even.The deal is a compromise between the two sides but is closer to the Russian than the Saudi position. Markets responded positively to the news. The OPEC+ alliance seems robust. Russia is keen to stay in OPEC+ partly because of its growing relationship with Saudi Arabia which includes lucrative defense sales to Saudi. Not everyone in the Russian elite is happy with being in OPEC+ or even with production cuts. Therefore the government has to balance various interests within Russia.

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