OPEC+ could change the terms of its oil production cut deal if the members of the pact agree to do it, Saudi Energy Minister Abdulaziz bin Salman said today as quoted by Reuters.
“We did tweak and I believe with consultation with our friends, some of them are present here and some of them are not, but I know how heartily they are committed to the principle of tweaking,” bin Salman said at the ADIPEC conference.
“I would go and argue it could be a tweak even beyond what the so-called analysts are talking about,” he added.
Analysts have been arguing OPEC+ could decide to extend the current production cuts of 7.7 million bpd into next year instead of following the original terms of the April deal and relaxing these to 5.7 million bpd. There have also been reports that said Saudi Arabia, Russia, and others were considering a reversal of the cut eases in response to the latest oil price decline.
The remarks pushed oil prices higher, but it is doubtful that the jump will hold as Libya reported it had raised its oil production to above 1 million bpd. Although the National Oil Corporation said it may not be able to sustain this level of production without solid financial help from the government, the fact remains that a million additional barrels are going into a market most consider still oversupplied.
Meanwhile, Covid-19 cases continue to surge in Europe and the United States. The U.S. seven-day average last week topped 100,000 cases daily, with some hospitals getting overwhelmed by the number of people needing to be hospitalized. In Europe, restrictions are tightening further in response to the surge in cases.
In addition to the grim oil demand situation, OPEC may also have another problem: a Biden presidency. According to a Reuters report, sources from the cartel expect tensions in the future because Biden could take a different stance towards Iran, Venezuela, and Russia.
By Irina Slav for Oilprice.com
ADVERTISEMENT
More Top Reads From Oilprice.com:
- Four OPEC+ Members Favor Extended Cuts
- The U.S. Officially Quits The Paris Climate Agreement
- Two Major Power Blocs Are Vying For Power In The Middle East
Still and given the current sluggish global oil demand, OPEC+ should in no way lower its guard and ease the production cuts. It should go ahead with extending the current cuts of 7.7 million barrels a day (mbd) beyond January 2021 for at least three months and even deepening them if necessary and then assess the situation in the market. This is very important in view of the return of Libya to the market with a reported production approaching 1 mbd albeit unsustainable as Libyan oil sources suggested.
A Biden administration knows that US sanctions against Iran and Venezuela have failed miserably while those against Russia have strengthened the Russian economy and helped its extensive diversification. Whatever Biden throws at them won’t be worse than Trump’s sanctions. And while Biden will take a harder line against Russia, his approach to Venezuela and Iran might ease slightly.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
for example (inter-market correlation in FOREX) chinese yuan is rising(as china had bet big on us shale) and so with US shale collapse USD will be a weaker currency(relatively speaking)
US has admitted that only 3 mmdp loss in shale oil. but the fact is entire 9 mmdp is vapourised.
once this secret becomes clear to investors you will see oil prices rising faster . I also expect natural gas prices to rise as a correlation effect(energy market commodities).