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The oil cartel Opec and their cooperating countries (together the group called Opec +) met on Monday to discuss a proposal to continue the current production cuts that were introduced after the oil demand fell during the corona crisis.
However, no agreement was reached on whether the provision should be introduced, and the group announced after the cartel’s meeting that it will postpone further discussions until Thursday.
After several days of direct negotiations between Opec’s heavyweights, hence Russia and Saudi Arabia, the group is now negotiating a gradual and partial reduction of production cuts over a period of several months, Bloomberg News reports on Thursday.
It is unclear whether the gradual phasing out will then begin at the turn of the year or later in the first quarter.
Wall Street Journal writes for its part that sources the newspaper has been in contact with, says that the cartel is approaching an agreement on a cautious increase in production of 500,000 barrels per day in January.
The price of a barrel of North Sea oil (burnt spot) fell very abruptly from an increase of about one percent to a decrease of 0.6 percent in advance of the meeting on Thursday.
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However, the price has recovered somewhat, and at 12 o’clock is at 48.0 dollars a barrel, an increase of 0.1 percent.
Will postpone production increase
The disagreement between the parties in the meeting has been that some countries want to keep the current cuts of 7.7 million barrels per day to take care of a vulnerable oil market after the corona, while other countries want to curb the cuts to 5.8 million barrels to take advantage of rising oil prices in the hope of a renewed coronary vaccine.
It is the smaller producers the Emirates and Kazakhstan who have strongly opposed continuing the cuts, while the leading OPEC countries Russia and Saudi Arabia are in favor of continuing the cuts.
Gradual increase
Analyst Helge André Martinsen in DNB Markets writes in an oil commentary on Thursday that a possible and probable outcome could be to keep the current cuts of 7.7 million barrels per day through January, and then increase production by one million barrels for February and March, with an increase of another million barrels in April.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases using a link, which leads directly to our pages. Copying or other form of use of all or part of the content, can only take place with written permission or as permitted by law. For additional terms look here.
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