Encouraged by vaccination programs and economic stimulus packages, OPEC and its allies are expecting a summertime resurgence in global oil demand and are planning to pump more crude as a result.
The announcement on Thursday was a surprise to oil markets, which had anticipated output to hold steady. But it wasn't an unpleasant developent: while supply increases often push prices down, oil actually rose after the news of this apparent optimism.
The deal between OPEC members and their allies, collectively called OPEC+, call for production to increase progressively in May, June and July. Meanwhile Saudi Arabia, over the same time frame, will gradually lift its voluntary cuts. Together the two changes will add some 2 million barrels of oil per day to global production by midsummer.
The group will continue to meet monthly to determine if they need to change course.
"We can freeze, we can increase, we can decrease," Saudi energy minister Abdulaziz bin Salman told reporters, jokingly referencing the movie Bend it Like Beckham to describe the cartel's ability to shift its trajectory.
Crude prices cratered last year because of the coronavirus pandemic, and unprecedented production cuts by OPEC+ played a key role in pushing them back up. Prices are now north of $60, more than double what they were a year ago.
Regina Mayor, global head of energy at KPMG, said ahead of the meeting that this track record is strengthening the OPEC+ alliance.
"Collectively they're seeing success in their efforts," she said. "So it's allowing them to stay more united."