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Oil producers meeting to discuss output
Published in The Saudi Gazette on 29 - 11 - 2020

The Organization of Petroleum Exporting Countries (OPEC) is due to host the 180th ministerial conference and the 12th ministerial meeting of OPEC Plus on Monday and Tuesday to discuss prospects of maintaining cut of the oil production.
The oil sector stakeholders are scheduled to hold the sessions via video conference application, pondering possibility of hammering out a new deal whether to keep decrease of the crude output by 7.7 million barrels per day.
Basically on the table is a recommendation of the joint OPEC-non-OPEC ministerial committee to slash the production in a bid to boost markets' stability. The virtual sessions coincide with OPEC's 60th anniversary and fourth anniversary of the coalition, established on Dec. 10, 2016.
OPEC plus crude producers, in April, trimmed the output by 9.7 million bpd, 10 percent of the global demand that fell at the time due to ramifications of the coronavirus crisis.
Sources close to OPEC said Sunday the conferees would seek to capitalize on the noticeable recovery of the oil prices that hit $46 pb, highest level since outbreak of the pandemic late last year.
Participants in the OPEC+ gathering would look into the latest regular report by the organization that predicted demand increase for OPEC crudes next year at a rate of 5.2 million bpd as compared to 2020. In light of this forecast, the decision makers will study duration of the output cut.
Although current price remained short of the producing states' aspiration to see it at the level of $60 pb to be compatible with the price upon which their budgets had been projected, they appeared generally satisfied with the latest price level, considering the unchecked spread of the virus globally.
Observers link the price improvement to the US presidential process, high hopes upcoming mass production of vaccines will curb the contagion along with the forecast such a success will dissuade states' leaders from ordering further lockdowns giving way for restoration of normal life and recovery of industries namely those that require energy, in addition to restoration of regular air transports.
Moreover in this vein, observers allude, as another factor for the prices' reasonable level, to states' latest financial incentives' policies, intended to relieve cash-strapped citizens and jobless; in the shadow of the coronavirus crisis that paralyzed wide sectors of the businesses.
OPEC Secretary General Mohammad Sanusi Barkindo has acknowledged that balancing supply and demand has become harder due to global reserves' growth by a staggering one billion bpd since start of this year.
The crude reserves' glut could have been much bigger had the OPEC+ countries made no significant efforts to maintain the market balance, Barkindo believes.
The producers' commitment to the output cut reached a remarkable and record level of 100 percent in November, according to many observers. Moreover, they believe that the conferees will opt to maintain the current level of the crude production in the first half of the coming year (2021).
Statistics showed that costs of facing the second wave of the virus exceeded USD 20 trillion, equivalent to 20 percent of the global gross product. OPEC noted in its regular report, released last week, that the demand for the OPEC crudes, in 2020, dropped by 200,000 bpd to stand at 22.1 million bpd, 7.2 million bpd less as compared to 2019.
Additionally, the organization predicted in its report that this demand would reach, next year, 27.9 million bpd, some 5.6 million bpd higher than that of 2020. — KUNA


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