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AFP
London
Members of the OPEC group of oil producers struck a deal to increase production over coming months, but by less than anticipated in their previous accord.
“It has been decided to increase the amount of oil offered to the market from January 2021, with a total increase from OPEC+ countries of 500,000 barrels per day,” the Kazakh energy ministry said in a statement at the end of video-conference of countries in the OPEC+ club.
The previous agreement entailed a cut of 7.7 million barrels per day (bpd) and had been scheduled to be eased to 5.8 million bpd on January 1.
The video-conference meeting of the OPEC+ grouping was pushed back from Tuesday and comes after three days of inconclusive discussions among the 13 members of OPEC proper.
Observers say the postponement pointed to an agreement being harder to reach than initially thought.
The meeting was originally scheduled for 1300 GMT but eventually started almost two hours later.
The first wave of the coronavirus pandemic sent oil demand -- and prices -- plummeting in the spring, with the benchmark American contract even going into negative territory for the first time in history.
After tough negotiations in April, OPEC+ -- which includes Russia -- agreed on drastic production cuts in order to try to put a floor under oil prices.
Despite hitting producers’ revenues hard, those cuts did help drag prices back up again.
However, the second wave of the pandemic has dashed hopes of a rapid “V-shaped” recovery for the economy and for oil demand.
After falling slightly in early Thursday trading, prices for both the US crude oil benchmark West Texas Intermediate (WTI) and Europe’s Brent North Sea were holding steady just after the start of the OPEC+ meeting, at $45.30 and $48.36 respectively.
- Thorny subjects -A recent surge in crude prices -- up by 25 percent over the course of November -- together with positive news from several companies on coronavirus vaccines meant some countries were left sceptical of the need for further sacrifices.
Meanwhile, the perennially thorny subject of whether all members are respecting production quotas laid down in previous agreements was once again on the table.
Some were insisting that those who are currently overproducing be made to comply before further restrictions are imposed.
“It is unlikely that the strict implementation of the agreed cuts... will be achieved, which will undermine their effectiveness and confidence in the group,” according to Eugen Weinberg of Commerzbank.
The cartel will also have to pay attention to developments in the three members which have been granted exemptions from quotas -- Libya, Iran and Venezuela.
Libya’s production had been almost wiped out by civil conflict but has spiked since October and now stands at over one million bpd, according to the country’s National Oil Corporation (NOC).
London
Members of the OPEC group of oil producers struck a deal to increase production over coming months, but by less than anticipated in their previous accord.
“It has been decided to increase the amount of oil offered to the market from January 2021, with a total increase from OPEC+ countries of 500,000 barrels per day,” the Kazakh energy ministry said in a statement at the end of video-conference of countries in the OPEC+ club.
The previous agreement entailed a cut of 7.7 million barrels per day (bpd) and had been scheduled to be eased to 5.8 million bpd on January 1.
The video-conference meeting of the OPEC+ grouping was pushed back from Tuesday and comes after three days of inconclusive discussions among the 13 members of OPEC proper.
Observers say the postponement pointed to an agreement being harder to reach than initially thought.
The meeting was originally scheduled for 1300 GMT but eventually started almost two hours later.
The first wave of the coronavirus pandemic sent oil demand -- and prices -- plummeting in the spring, with the benchmark American contract even going into negative territory for the first time in history.
After tough negotiations in April, OPEC+ -- which includes Russia -- agreed on drastic production cuts in order to try to put a floor under oil prices.
Despite hitting producers’ revenues hard, those cuts did help drag prices back up again.
However, the second wave of the pandemic has dashed hopes of a rapid “V-shaped” recovery for the economy and for oil demand.
After falling slightly in early Thursday trading, prices for both the US crude oil benchmark West Texas Intermediate (WTI) and Europe’s Brent North Sea were holding steady just after the start of the OPEC+ meeting, at $45.30 and $48.36 respectively.
- Thorny subjects -A recent surge in crude prices -- up by 25 percent over the course of November -- together with positive news from several companies on coronavirus vaccines meant some countries were left sceptical of the need for further sacrifices.
Meanwhile, the perennially thorny subject of whether all members are respecting production quotas laid down in previous agreements was once again on the table.
Some were insisting that those who are currently overproducing be made to comply before further restrictions are imposed.
“It is unlikely that the strict implementation of the agreed cuts... will be achieved, which will undermine their effectiveness and confidence in the group,” according to Eugen Weinberg of Commerzbank.
The cartel will also have to pay attention to developments in the three members which have been granted exemptions from quotas -- Libya, Iran and Venezuela.
Libya’s production had been almost wiped out by civil conflict but has spiked since October and now stands at over one million bpd, according to the country’s National Oil Corporation (NOC).
