OPEC + Postpones its Meeting to Give More Time to Negotiations

The meeting of the ministers of the OPEC + alliance got postponed to Thursday. Its objective is to allow more consultations on the barrels of oil they want to pump from January 1.

Sources from the Ministry of Energy of Kazakhstan have stated that the participants in the negotiation process decided to postpone the OPEC + meeting for two days. 

The ministers of the Organization of Petroleum Exporting Countries closed a telematic meeting this Monday. They had mixed thoughts on the level of pumping from 2021. They faced two divergent scenarios, one focused on the second wave of the pandemic and another on vaccines against covid-19.

A decision in this regard was to be taken this Tuesday with the OPEC + alliance. Still, in the absence of consensus and negotiation, the final decision date moved to Thursday.

The markets expect the group to maintain the supply cut of 7.7 million barrels per day at least during the next quarter. The supply reduction has been in effect since August and would end on December 31, according to an agreement sealed in April. The agreement aimed to limit pumping oil for two years with a phased plan. The first phase lasted from May to July, and it involved the withdrawal of 9.7 million BPD from the market. It amounts about 10% of the world supply. Since then, the group moderated the cut to the current 7.7 million BPD. 

As of January 1, the third and final stage was foreseen. A new moderation, up to 5.7 mbd, would apply until April 2022.

There is a relative consensus within OPEC

Iranian oil minister, Bijan Zanganeh, stated that even though some members acted reluctant to continue with the current cut, there was a relative consensus within OPEC to extend its validity.

He also pointed out that Russia and Kazakhstan had doubts. Precisely, the latter prefers the increase that had been foreseen came into force, at least for the first three months.

On the other hand, there is no consensus between the United Arab Emirates, Russia and Saudi Arabia. UAE demands that, before extending the cut, all participating countries fully comply with their part of the commitment. At the same time, Moscow prefers to restore production from January, and Riyadh gradually insists on a three-month extension of the current pumping restrictions.