OPEC+ debates whether to ease oil output cuts, as U.S. resumes energy calls to Saudi

OPEC+ debated on Thursday whether to keep deep oil output cuts in place or ease them after the administration of U.S. President Joe Biden resumed Donald Trump's practice of calling OPEC leader Saudi Arabia and said energy should be kept affordable.

OPEC+ debated on Thursday whether to keep deep oil output cuts in place or ease them after the administration of U.S. President Joe Biden resumed Donald Trump's practice of calling OPEC leader Saudi Arabia and said energy should be kept affordable. U.S. Energy Secretary Jennifer Granholm said on Twitter she had spoken to Saudi Energy Minister Prince Abdulaziz Bin Salman.

"We reaffirmed the importance of international cooperation to ensure affordable and reliable sources of energy for consumers," she wrote, potentially adding a further reason for the group to consider a production hike. Brent crude was above $63 a barrel on Thursday, up more than 20% since the start of 2021 and near this year's high.

The Organization of the Petroleum Exporting Countries and allied producers, a group is known as OPEC+, have cut output by almost 7 million barrels per day (bpd) to support prices. In addition, Saudi Arabia has made an extra 1 million bpd voluntary cut. Thursday's virtual meeting of OPEC+ was scheduled to start at 1300 GMT. "The picture is still not clear," one source said.

Heading into the meeting, OPEC+ delegates had said the group would likely keep most of those cuts in place, given a weak demand outlook because of new coronavirus lockdowns. But the mood changed in the past 24 hours and the group is now deliberating whether to roll over the cuts or raise output, three OPEC+ sources said. The increase could amount to 0.5 million bpd, two sources said.

It was not clear if Granholm's call influenced the shift. Trump repeatedly used his influence to force Saudi Arabia to adjust oil output policy. When prices spiked, he insisted OPEC raise production. When oil prices collapsed last year because of the pandemic, he called Saudi Arabia and Russia to help clinch record oil output cuts to protect the U.S. shale oil industry.

Biden's administration, which had at least until this week refrained from such an approach, has had appeared to have much cooler dealings with Riyadh and imposed sanctions on some Saudi citizens over the 2018 murder of Jamal Khashoggi. When OPEC+ decided to keep output steady on March 4, driving prices higher, White House Press Secretary Jen Psaki made no direct comment on the group's move.

Reuters reported last month that no member of Biden's team until then had reached out to OPEC about rising oil prices. Adding to factors that could affect deliberations by OPEC+, some OPEC members have expressed frustration that non-OPEC Russia and Kazakhstan supported a broad rollover of existing cuts while also requesting small output increases for themselves for the third month running, OPEC+ sources said.

Iran, whose output has been severely crimped by U.S. sanctions, could also become a topic for discussion after it emerged Iranian exports were on the rise, especially to China, amid a renewed tension between Washington and Beijing.