OPEC set to reconvene for further deliberations

Algeria’s Minister of Energy and President of the OPEC Conference Abdelmadjid Attar.

Adjourning the 180th Meeting of the OPEC Conference on Monday; with member country delegations set to reconvene for further deliberations on Tuesday.

The meeting, held over videoconference; started with remarks from Algeria’s Minister of Energy and President of the OPEC Conference Abdelmadjid Attar here earlier. Attar welcomed Iraq Oil Minister Ihsan Abdul Jabbar Ismaeel to the grouping. While thanking his predecessor Thamir Abbas Al-Ghadhban for his contributions and services.

He also stated that the year 2020 continues to be a year of immense challenges caused by the COVID-19 pandemic. Adding, it continues to affect adversely the global economy and, consequently, the world energy markets, in an unprecedented manner.

He said, “The road to recovery is long and bumpy. It requires great patience. However, there are signs of light at the end of the tunnel. Next year, the global economy is to return to growth; expanding by an estimated at 4.4%, and oil demand growth is to be high, in the tune of 6.1 mb/d.

“This brighter outlook for 2021 gives us a cautious optimism. It is also a clear indication that we are on the right path.”

While the outlook for 2021 seemed bright; Rystad Energy opined that most traders who thought that OPEC’s production boost postponement was a done deal. It was due to be now, could be in for a surprise with a consensus on the deal not arrived yet.

In a development that was a surprise for many, except for experienced OPEC+ observers; several members have their objections to approve an extension of the current production quota, it said.

Although Algerians to say that OPEC side of the alliance reached a consensus on Monday to extend the current cuts by 3 months; the consensus is provisional and needs to be reaffirmed on Tuesday at the wider OPEC+ meeting.

Very little compensation

It is doubtful that the consensus among OPEC is solid; as certain producers complained about others’ lack of compliance and requested compensating their lag. Complaints against laggards echoed since the summer though but recording very little compensation. So it will take some convincing to seal the deal on Tuesday.

“We believe that OPEC+ will finally agree to extend the current production curtailments into 2021 for at least three months as, if it fails to do so, a glut of over 200 million barrels is waiting to be built from January till May,” Rystad Energy’s analysis said.

Oil prices fell Monday; as news broke that there is no clear consensus yet among the OPEC+ alliance on how to proceed from January. The group is to bring back curtailed production from January and, although rumors have it that an extension of current output levels is possible instead, the economies of many of its members are tied to oil sales and are currently under pressure.