The OPEC+ group of producers must continue to calibrate the easing of its collective oil production cuts to the still fragile global oil demand in the pandemic, Abdelmajid Attar, the Energy Minister of Algeria, which holds OPEC’s rotating presidency for 2020, told Bloomberg in an interview.
“Despite the positive signs and a significant improvement in oil prices, I think we should be very cautious,” Attar told Bloomberg.
Earlier this month, the OPEC+ group managed to avoid a no-deal outcome at its meetings, which went on for days amid disagreements over how the OPEC cartel and its Russia-led non-OPEC partners would act next year with COVID-19 still depressing fuel demand in the world.
The original plan for a 2-million-bpd increase of OPEC+ production as of January was watered down to a 500,000-bpd rise for January in a compromise agreement, largely seen as a positive outcome that avoided a break-up of the OPEC+ pact or even of OPEC.
The total production cut for January will thus be 7.2 million bpd, compared to the current 7.7 million bpd collective cut, while the ministers decided to hold monthly meetings to decide the oil production policy for the following month.
The producers in the pact are set to increase production by no more than 500,000 bpd each month through April 2021, OPEC said at the end of its meeting for the year.
The next meetings of the Joint Technical Committee (JTC) and the Joint Ministerial Monitoring Committee (JMMC), originally scheduled for this week, have been pushed to early January, ahead of the next ministerial meeting on January 4, OPEC said in a short statement on Monday, without giving any details about the postponement.
Easing the cuts by a total 2 million bpd between January and April is not a goal in itself, as the OPEC+ group needs to ensure drawing down of inventories, the Algerian energy minister told Bloomberg.
OPEC itself is cautious about oil demand early next year, and it cut on Monday, again, its oil demand projections for 2021, as mass vaccinations are likely to take months before helping an oil demand rebound.
By Tsvetana Paraskova for Oilprice.com
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