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Summary
- OPEC members and their partners will be meeting today to consider the monthly crude production for February
- There has been a hike of 500,000 barrels-a-day for the month of January
The Organization of Petroleum Exporting Countries (OPEC) members and their partners will be meeting today (4 January) to discuss output levels for the month of February. The meet will be held via the video-conferencing route.
This comes after a price war between Saudi Arabia and Russia and the decline in consumption of oil in 2020 due to the Covid-19 pandemic. The cartel members had planned last month to raise production by half a million bpd from January, it was reported. This would be a part of the 2 million bpd gradual increase this year. But some members have raised their doubts and have questioned the need at this hour with more coronavirus cases being reported.
(Image source: ©Kalkine Group 2021)
Before the meeting, the group has warned of risks to the oil market from the resurgent pandemic saying that the outlook for H1 2021 is mixed. At a preparatory meeting yesterday, Mohammad Barkindo, the Secretary-General of the OPEC, said that there are many downside risks at the moment.
However, the delegates said that several countries including Saudi Arabia sounded cautious at the Sunday meeting about raising the production level further in February.
Russia is in favour of an additional boost, while Riyadh has not disclosed its views publicly.
The other highlight for the meeting is the alliance of oil producers led by Russia and Saudi Arabia, which will decide whether the restoration of crude supplies can continue without capsizing the price recovery. OPEC spent most of 2020 working towards attaining a price momentum.
To Know More, Do Read: OPEC+ agrees to crank up oil production from January
Presently, the OPEC idles 7.2 million barrels a day, or about 7 per cent of the world’s total supplies, which is being planned to be brought down to 1.5 million barrels per day by the producers in carefully set out installments.
The OPEC production increased by 190,000 barrels a day to 25.3 million barrels per day in December, with several countries such as Algeria, Angola, Iran, Libya, the United Arab Emirates, and Venezuela boosting supply. Further, if things go as planned, there will be a rise in crude oil demand to 95.9 million barrels a day this year from 90 million in 2020 as forecasted by the OPEC.
In the Sunday meeting, it was also agreed that there will be an increase in the frequency of the meetings. The members would be meeting at the beginning of each month in order to decide on any adjustments to production volumes for the forthcoming months.
OPEC had projected a slight rebound in the market last month while noting continued uncertainties, especially in the transport sector. However, predicting the evolution in demand remains difficult even after some of the countries have begun with rolling out vaccination programs against the deadly coronavirus infection.
On Monday, Brent crude for March was at $51.76 a barrel, down by 0.08 per cent, at 0038 GMT. On the other hand, the US West Texas Intermediate crude for February plummeted by 9 cents to a low value of $48.43 per each barrel.
