Under the agreement, members of the Organization of Petroleum Exporting Countries, along with Russia and other countries, will increase production by 500,000 barrels per day in January and possibly a similar amount in the following months. The increase, less than 1% of the global oil market, comes at a time when demand is still under pressure from the coronavirus pandemic. An agreement has not yet been reached, officials said, and issues related to past compliance in several countries could still prevent an agreement when the group meets online next week to discuss the issue. More recently, high oil prices have also changed market dynamics, they say, giving some countries more firepower when they argue for the reopening of taps. Oil ministers from the Organization of petroleum exporting countries and other Russian-led producers met via video conference on Saturday and agreed to continue to cut 9.7 million barrels per day – or about 10 percent of world production in normal times – until July, according to an OPEC press release. Iraq, which had one of the worst compliance rates in May, agreed to further cuts, although it was unclear how Baghdad would reach an agreement with oil companies to curb Iraqi production. [OPEP/O] “I welcome OPEC-plus for achieving an important agreement that comes at a crucial time today, as oil demand continues to recover and the world economy is reopened,” U.S. Energy Secretary Dan Brouillette wrote on Twitter after the extension. “Despite the economic and financial circumstances facing Iraq, the country maintains the agreement,” OPEC spokesman Assem Jihad, a spokesman for Iraq`s oil ministry, said on Saturday. According to the initial agreement reached on 12 April by the joint producer group OPEC Plus, production was expected to increase gradually after June. Later, on 3 April, the Saudi foreign and energy ministers issued statements criticizing Putin and accusing Russia of not participating in the OPEC agreement.  On March 8, 2020, Saudi Arabia launched a price war with Russia, which facilitated a quarterly drop of 65% in the price of oil.  In the first weeks of March, U.S.
oil prices fell by 34%, crude oil by 26% and Brent oil by 24%.   The price war was triggered by a breakdown in the dialogue between the Organization of the Petroleum Exporting Countries (OPEC) and Russia over planned oil production cuts in the midst of the COVID 19 pandemic.  Russia left the agreement, which led to the downfall of the OPEC alliance. Oil prices had already fallen by 30% since the beginning of the year due to a drop in demand.  The fight for awards is one of the main causes and impact of the global stock market crash that followed.  The latest news about the effectiveness of coronavirus vaccines, which have pushed oil prices to their highest level since their fall in April, may have made it more difficult to reach an agreement. In response to these higher prices, some oil producers saw less need to maintain supply and wanted to increase pumps to try to improve nearly a year with gloomy oil yields. As a result of the COVID 19 pandemic, plant production and transportation declined, which also led to a decline in aggregate oil demand and oil prices.  February 15, 2020, the International Energy Agency forecast that demand growth would fall to its lowest level since 2011, with growth of 325,000 barrels per day over the full year, to 825,000 barrels per day and a decline in consumption of 435,000 barrels per day in the first quarter.  Although global oil demand has declined, a drop in demand in Chinese markets, the largest since 2008, triggered an OPEC summit on March 5, 2020 in Vienna.
At the summit, OPEC agreed to further reduce oil production by 1.5 million barrels per day by the second quarter of the year (an overall production reduction of 3.6 million bpd from the original 2016 agreement), and the group is expected to review this policy on 9