BAKU, Azerbaijan, Nov.9
By Leman Zeynalova – Trend:
Looking at the market situation, combined with a reactive way OPEC+ is dealing with all, cuts will be extended, Cyril Widdershoven, a Middle East geopolitical specialist and energy analyst, a partner at Dutch risk consultancy VEROCY and Global Head Strategy Risk at Berry Commodities told Trend.
“There is no room at all for more volumes. What OPEC should do right now is to keep to its cuts, but indicating a willingness to cut even more. Inside of OPEC, Iran, Iraq and Libya already will be putting more oil on the market, make total picture even more difficult,” said the expert.
OPEC+ plans to have the cuts eased by 2 million bpd beginning in January 2020. However, the fragile oil market and the second COVID-19 wave with renewed lockdowns in major European economies are threatening the pace of global economic and oil demand recovery. Market speculation is already ripe that OPEC+ should, and probably would, delay the easing of the cuts until there is more certainty about the demand recovery.
Francis Perrin, Senior Fellow at the Policy Center for the New South (PCNS, Rabat) and at the French Institute for International and Strategic Affairs (IRIS, Paris), told Trend that the OPEC+ (OPEC - 13 countries - and 10 non-OPEC countries including Russia) countries decided in April 2020 to reduce their oil production by 9.7 million barrels per day in May-July.
“The reduction was to amount to 7.7 million b/d between August and December 2020. From 1 January 2021 to end April 2022 it would be 5.8 million b/d.
In the current context with the COVID-19, curfews or lockdowns in several countries, low oil prices, Libya's growing oil output (1 million b/d now) after a ceasefire at the end of October and the prospect of Iran's return on the world market, OPEC+ countries are wondering whether it would be wise to implement the third phase of the April 2020 agreement at the beginning of next year. The answer to this question is probably no.
But it remains to be seen if Russia, the second-largest world oil producer and a key player within OPEC+, will accept this option. So far it is not a done deal,” added Perrin.
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