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OPEC Plus Considers Coronavirus Second Wave Repercussions on Global Oil Demand

16-11-2020

The OPEC Joint Ministerial Committee on Monitoring the Production Reduction Agreement will hold its 24 Ministerial Meeting Tuesday through teleconference to discuss the repercussions of the second wave of Covid-19 on the world demand for crude oil. Sources close to the Organization of Petroleum Exporting Countries OPEC informed Kuwait News Agency(KUNA) on condition of anonymity that the committee would also present its periodic assessment conditions of the global oil market and the levels of conformity between the market fundamentals and demand. In addition to the decision to determine the production levels falls within the Oil Ministers OPEC Plus, the excepted recommendations of the committee are important especially as they come two weeks before the virtual Ministerial meetings of OPEC and OPEC Plus Observers expect that the recommendations of the Joint Ministerial Committee of OPEC Plus, which is co-chaired by Saudi Arabia and Russia will be important in determining the future of the OPEC Plus alliance, which does not rule out the possibility of experiencing major difficulties in the next stage, considering the results of the American elections on one hand, and Russia's interests in increasing production at the end of this month and the first of next December. The observers that the recommendations of the Joint Ministerial Committee of the Organization of Petroleum Exporting Countries (OPEC), which is co-chaired by Saudi Arabia and Russia which does not put out the possibility of facing major difficulties in the upcoming stages considering the results of the American elections on one hand and Russia’s interests in increasing production on the other. Also the observers believe that the strong commitment shown by the OPEC Plus alliance which reached 10 percent last October which will push the alliance to maintain this trend during the first half of next year as it is ideal for the oil market excepted the deterioration in demand. The Joint Ministerial Committee will review the monthly report which is prepared by its Joint Technical Committee and developments in the global oil market since the last meeting last October. The Committee will also take a look at the market prospects in the first half of next year. However all countries participating in OPEC Plus alliance to remain against unstable market conditions and prospects under circumstances of partial closure especially in Europe in an attempt to reduce the high rise in the incidence of (Covid-19). OPEC appears to be forced to reconsider its plan to ease current cuts for a range of reasons during the next Ministerial meeting, which the Organization report cited on one hand and rapid a recovery in Libyan production. Which has now reached more than one million barrels per day after eight months of port closure. The return production of Iran and Venezuela to the market after the possible lifting of sanctions during the first quarter of next year, which also represents a real challenge and requires OPEC Plus to prepare for these expected developments after the victory of President Joe Biden in the American elections. The market observers said that during the next Ministerial meeting OPEC will have two options, the first option is to keep the production at their current levels of 7.7 million barrels per day. The second option is to reduce the level cuts by two million barrels per day for a period of three to six months from the beginning of next year, while excluding OPEC’s resort due to the market’s conditions to further deepening of production levels at the Ministerial meeting. The possible return of the production of Iran and Venezuela to the market after the possible lifting of sanctions on them during the first quarter of next year also represents a real challenge and requires (OPEC Plus) to prepare the victory of the American President Joe Biden in the American elections for these expected developments. OPEC will have two options at its next ministerial meeting, market observers said that the first one is to keep production levels at their current levels of 7.7 million barrels per day. The second option is to reduce the cut levels by two million barrels per day for a period of three to six months from the beginning of next year, while excluding OPEC's resort under current market conditions, to a further deepening of production cut levels at the next ministerial meeting.