VIENNA — OPEC and a group of Russia-led oil producers agreed on Thursday to increase oil production by 500,000 barrels per day from January and will meet monthly after that to decide whether to further adjust output.

The move ends a standoff over oil policy among the two sides and promising a modest boost to global supplies as oil markets tighten.

The decision to ease production cuts was taken at the 12th OPEC and non-OPEC ministerial meeting held via videoconference.

The meeting was chaired by Saudi Arabia’s Minister of Energy Prince Abdulaziz Bin Salman and co-chaired by Russian Deputy Prime Minister Alexander Novak.

Commenting on the agreement after the meeting, Prince Abdulaziz said: “This is a mature agreement....we will tweak whenever it is necessary and possible.”

The Saudi energy minister also said that he hopes the new coronavirus wave is short-lived and that OPEC plus needs to continue being in a “cautious mode.”

Hailing the deal, Russian Deputy Prime Minister Alexander Novak said:” We managed to arrive at a very balanced decision despite difficult negotiations.

During the meeting, Novak said that Prince Abdulaziz is “an example of a true leader.”

The Russian deputy PM said that participants agreed that 2 million barrels a day needed to return to the market “at some point” but that any increase would be gradual. The monthly meetings could decide in either direction, up or down, he said.

Novak said that there will be a gradual return of production to the market and will depend on market conditions.

He said that the cuts in Jan will be 7.2 million bpd instead of 7.7 million bpd.

The Russian deputy PM added that the adjustment each month can be an increase or a cut depending on market conditions.

At the outset of the meeting, the participants welcomed the new Russian Minister of Energy, Nikolai Shulginov.

The meeting welcomed the positive performance in overall conformity levels to the production adjustments since it last met in June, and the constructive response from many countries to the compensation mechanism in accommodating their underperformed volumes as agreed at the June ministerial meetings and later amended in September 2020.

OPEC and non-OPEC participating countries urged Prince Abdulaziz to continue in his role as Chair of the OPEC and non-OPEC ministerial meeting.

Prince Abdulaziz's perseverance, diligence, and extraordinary efforts have been highly appreciated by all participating countries and instrumental in helping counter the impacts of the COVID-19 pandemic and in stabilizing the oil market through the successful implementation of the previous agreement’s objectives, the participants observed.

The Saudi energy minister accepted the offer to continue in his role as chairman of the meeting and vowed to vigorously pursue the sustainable oil market stability desired by both producers and consumers.

The meeting also expressed its deep appreciation and gratitude to the Russian deputy PM for his exemplary leadership as co-chair of the meeting. The meeting asked him to continue in this role and thanked him for his tireless efforts and strong support for the previous agreement during these extremely challenging times.

In its initial reaction Rystad Energy, an independent energy research and business intelligence company, said that the decision was not on the expected lines.

It said 500,000 bpd from January is not the nightmare scenario that the market feared, but it is not what it really expected weeks ago.

During this week traders realized that OPEC+ was not as aligned as they expected and that extending the current cut levels would not be the piece of cake they hoped for.

Although there was intense pressure to keep output intact it appears that a settlement with revolting members is reached and a partial increase appears as the likely consensus.

Markets are now reacting positively and prices are recording a small increase as 500,000 of extra supply is not deadly for balances, according to Rystad Energy.

By only agreeing upon January’s production levels, the alliance now has some time to see if vaccinations will ease the oil demand destruction and speed up the recovery, the energy research company added.