Saudi Arabia: Oil prices continue its ascent in early March
Oil prices continued to rise in recent weeks, supported by positive developments on the Covid-19 vaccine front, the House’s approval of a third U.S. stimulus package, tighter supply—as Saudi unilaterally decided to cut production by an additional 1.0 mbpd in February–April. On 4 March, the OPEC oil basket traded at USD 64.24 per barrel, up 10.3% from the prior month. Moreover, the price was 27.9% higher on a year-to-date basis and was 24.2% higher than on the same day last year.
On 4 March, OPEC+ members met to discuss its current production curtailment schedule, the committee decided to keep its output cuts largely steady through April. Moreover, Saudi Arabia voluntarily decided to extend its 1 mbpd output cut, which was previously determined back in January for February–March into April. Meanwhile, the committee also agreed to allow Russia and Kazakhstan to increase its production levels by 0.13 mbpd and 0.02 mbpd, respectively for April.
In terms of OPEC production, combined crude oil output among members increased from 25.3 million barrels per day (mbpd) in December to 25.5 mbpd in January (the latest month for which data is available). This mostly reflected higher output in Saudi (January 2021: 9.1 mbpd; December 2020: 9.0 mbpd), Venezuela and Iran.
Our panelists expect Saudi oil output to recover slightly in 2021 relative to last year—enabling the energy sector to contribute positively to GDP—but to remain constrained by ongoing OPEC+ cuts nonetheless.