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Oil prices recovered on Tuesday following reports that Russia has agreed to extend the current level of production by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, into February. During a session on Monday, the group of major oil producers failed to reach an agreement on production levels for February, leading to a fall in oil prices.

Before the beginning of another round of the virtual discussions on Tuesday, Oilprice.com reported that Russia – one of the countries that demanded production increases in February during Monday’s talks – was in favour of maintaining the current output levels. OPEC+ had reached an agreement in December to increase output by 500,000 barrels per day (bpd) this month and make further adjustments in the coming months.

The group is meeting this week to review its pact and determine whether to further ease production cuts to stabilise the oil market as some countries go into new COVID-19 lockdowns.

Ahead of the OPEC+ virtual conference on Monday, oil prices rallied with Brent crude, the global benchmark, reaching $53 per barrel (pbl) – its highest since March 2020. West Texas Intermediate (WTI), the US benchmark, also rallied to its highest level since February of last year.

Oil prices tumbled on Monday as the group of oil producers deadlocked. Most OPEC+ members expressed their opposition to increasing oil output from February, citing the new waves of the coronavirus disease and renewed demand uncertainty. Meanwhile, Russia and Kazakhstan demanded another increase of 500,000 bpd from next month.

But earlier today, Amena Bakr, Deputy Bureau Chief and Chief OPEC Correspondent at Energy Intelligence, said on Twitter, "According to 2 informed sources: Russia will accept a one month rollover provided there will be an increase in March."

Reports of Russia's agreement to roll over the current output levels caused a rally in the futures market. As at 6 p.m. Nigeria time, Brent crude rose to $53.10 pbl, up 3.93 per cent, while the WTI rose by 4.56 per cent to $49.79 pbl, compared to the previous day's price declines.
   
Many oil producing countries are facing severe fiscal crisis due to lower prices caused by the COVID-19 pandemic. An increase in production would increase revenues for the countries. However, increasing production amid a decrease in demand as countries struggle to immunise their people against the raging virus would undercut the OPEC+ pact aimed at supporting oil prices and shoring up the national budgets of the oil producers.