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Five impressive facts about OPEC+ meeting

Oil&Gas Materials 5 March 2021 15:20 (UTC +04:00)
Five impressive facts about OPEC+ meeting

BAKU, Azerbaijan, March 5

By Leman Zeynalova – Trend:

OPEC+ (the 13 OPEC countries and 10 non-OPEC countries) took a very wise decision with an increase of only 150,000 barrels per day of its oil production level in April 2021, of which 130,000 b/d for Russia and 20,000 b/d for Kazakhstan, 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.

He recalled that in January 2021 OPEC+ had announced a similar decision with an increase of 150,000 b/d for February-March, Russia and Kazakhstan being the only countries to be allowed to ramp up their production (+130,000 b/d for Russia and 20,000 b/d for Kazakhstan).

“Oil markets are favorably impressed by this decision for the five following reasons:

- It was reached rather easily, which shows a good level of cohesion within OPEC+. Before March 4 there were anticipations of a difficult ministerial meeting with the risk of a clash between Russia and Saudi Arabia, the two largest oil producers among these 23 countries. It did not happen.

- The decision also shows that OPEC+ is aware of the necessity to remain very cautious in the current period due to the major uncertainties linked to the Covid 19 pandemics.

- Saudi Arabia extended its additional output reduction for the month of April, which is a way to send a strong signal to the oil markets. This reduction was first applied for the February-March period. It is a unilateral decision and it was well received on the markets as Saudi Arabia is the third-largest oil exporter and the leading oil exporter. It means that, over the February to April period, OPEC+ production will decrease and not increase.

- OPEC+‘s conformity with its decision on production cuts is now about 100 percent, which is excellent. It does not mean however that all the 20 countries concerned (Iran, Libya and Venezuela are exempted from production cuts) are respecting their commitments.

- For the countries which are not totally living up to their commitments there is a strong diplomatic pressure from OPEC+,” said Perrin.

He pointed out that as a consequence of this OPEC+ meeting oil prices rose by more than 4 percent on 4 March in London and New York.

“North Sea Brent (May 2021 contracts) closed at $66.74/b and West Texas Intermediate (WTI, April contracts) at $63.83/b. Oil prices are now at their levels of the beginning of January 2020 before the pandemics.

For OPEC+ so far so good after a very severe oil crisis in 2020. Mission accomplished,” Perrin concluded.

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Follow the author on Twitter: @Lyaman_Zeyn

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