OPEC agrees to extend oil production cuts for three months, Algeria says
- 30 November 2020
The Organization of the Petroleum Exporting Countries and partners including Russia agreed to joint cuts of 9.7 million barrels of crude per day in April (later eased to 7.7 million bpd), with the agreement coming in the wake of collapsing demand and plummeting prices brought on by the economic crisis associated with the coronavirus.
OPEC's members have agreed to extend existing crude oil production cuts for a three month period starting in January, and will lobby the cartel's partners to agree to the move, Algerian Energy Minister Abdelmadjid Attar, OPEC rotating president, has said, his remarks cited by Reuters.
A source from one of OPEC's delegations told Sputnik that while a consensus on extending output cuts for three more months was forming, some countries want to extend so-called compensation cuts, designed to make up for previous overproduction in violation of quotas, as well.
The source also indicated that OPEC+, the larger group of oil exporters, which includes OPEC's 14 members plus Russia, Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan, is expected to meet Tuesday to discuss the matter.
In their agreement in the spring, OPEC+ has planned on easing agreed cuts to 5.8 million bpd starting January 1. However, worse-than-expected economic recovery and countries' talk of second and third waves of coronavirus have tempered expectations.
In his remarks Monday, Abdelmadjid Attar said that "2020 continues to be a year of immense challenges caused by the Covid-19 pandemic," and indicated that a "second wave of the pandemic and related lockdowns put a damper on demand."
According to the minister, "the shock to the oil industry" experienced during the past year was "massive," and "its severe impacts will likely reverberate in the years to come."
Attar added that news of promising vaccines was insufficient to revise expectations, since it would likely take at least until the second half of 2021 for their impact on economic activity to be felt.