By the time the OPEC+ meeting began, the level of oil production for February 2021 was undecided, and most of the alliance members opposed a temporary growth. It should be noted that the OPEC+ countries discussed this issue even before the meeting.
OPEC+ plans to make one of the most important decisions for the future black gold market during the first few days of this year. On Monday, the alliance will determine whether the oil market is ready for the next growth in production up to 500 thousand barrels per day. However, the consequences of the detected coronavirus mutation in the UK may prevent the unanimous adoption of easing in the deal.
It can be recalled that the new alliance deal entered into force in May 2020, with a decline in oil production by 9.7 million barrels per day. In August, OPEC+ eased the restrictions to 7.7 million and now, it planned to reduce by 7.2 million in January 2021.
Due to a variety of unstable economic and social factors, OPEC+ members agreed to adjust their decisions on further production on a monthly basis, but in increments of no more than 500,000 barrels per day. The alliance chose October 2018 as the starting point for reducing production, and a separate value of 11 million barrels per day for Saudi Arabia.
A completely unpredictable decision can be expected from the New Year's meeting of the organization's members – both in upward and downward direction. This is despite the preliminary agreements to ease their restrictions on the planned 2 million b/d within a few months.
In addition, representatives who accepted preliminary agreements in early December 2020 amid promising news about vaccines against COVID-19, are unaware of the emergence of a new strain of coronavirus in the UK, which has so far been registered in more than 30 countries around the world. In this case, many states have already introduced new or increased existing social and economic restrictions in an effort to protect themselves from the dangerous form of infection. But unfortunately, this is not well-received by the oil market.
As a result, the forecast for the fate of black gold for the first half of 2021 remains quite multi-directional with quite a lot of negative factors. Nevertheless, the scenario for the second half of the year looks quite positive. Overall, the alliance forecast an increase in demand this year by 5.9 million barrels per day to the level of 2020.
Last November 2020, the reserves of oil and petroleum products in the OECD member countries showed a decline, while remaining 163 million barrels above their average level for the past five years and 205 million higher than in 2019. Considering these figures, the participating countries should keep on course and fully comply with the deal.
The final decision of OPEC+ on production will only become known after the general meeting of the ministers of the alliance. Before the meeting, a meeting of the ministerial monitoring committee is scheduled, which will make a recommendation on the parameters of the agreement.
