LONDON – Members of the Organization of the Petroleum Exporting Countries (Opec) group of oil producers will meet with allies tomorrow to see if they can reach an accord on extending production cuts over the coming months.
The video-conference meeting, scheduled to start at 1300GMT was delayed from Tuesday and comes after three days of inconclusive discussions among the 13 members of Opec proper.
Observers say the postponement points to an agreement being harder to reach than initially thought.
However, many still expect producers to eventually agree to push back the end of the current production cuts from January 1 next year to April 1.
The first wave of the coronavirus pandemic sent oil demand – and prices – plummeting in the spring, with the benchmark American contract even going into negative territory for the first time in history.
After tough negotiations in April, Opec+, which includes Russia, agreed on drastic production cuts to try to put a floor under oil prices.
Despite hitting producers’ revenues hard, those cuts did help drag prices back up again.
However, the second wave of the pandemic has dashed hopes of a rapid “V-shaped” recovery for the economy and oil demand.
Most producers, including Opec kingpin Saudi Arabia, therefore favour an extension of the current agreement, which entails a cut of 7.7 million barrels per day.
Markets were expecting producers to be able to agree on an extension of three to six months, with many viewing Monday’s meeting as a formality to sign it off.
But a recent uptick in crude prices – up by 25% over the course of November – together with positive news from several companies on coronavirus vaccines means some countries may need more convincing of the need for further sacrifices. – AFP, December 3, 2020
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