Members of the Organization of the Petroleum Exporting Countries (OPEC) and their partners via the OPEC + agreement meet by videoconference on Monday to decide on the volume of crude to put back on the market in February.
This ministerial meeting is part of a policy “attentive to market conditions” of the alliance, while the recovery in demand for black gold in 2021 remains uncertain.
At the end of the last summit, which was held between November 30 and December 3, OPEC + pledged to add 500,000 barrels per day in January, instead of the two million initially planned.
It was also on this occasion that the thirteen members of the cartel, led by Saudi Arabia, and their ten allies, led by Russia, had agreed to meet at the beginning of each month in order to decide on the adjustment, or no, the production volume for the following month.
This follow-up illustrates the cartel’s desire to maintain a strong influence on the market but also the seriousness of the situation in which the crude producers are plunged, who were satisfied before the health crisis of two summits per year at the headquarters of the organization. in Vienna, Austria.
This strategy has paid off for analysts at JBC Energy who note “the capacity of OPEC + to manage the market, laying the foundations for the recovery of Brent despite the uncertainty that continues to weigh on demand.”
The two benchmark contracts, Brent from the European North Sea and US WTI, were trading at around $ 50 per barrel at the end of the week, a lower level than at the start of 2020 but much higher than the depths affected in April. latest.
– Two heavyweights –
The outcome of the negotiations of the twenty-three members of OPEC +, three of whom are currently exempt from quotas, is quite dependent on the goodwill of the two heavyweights of the alliance, Russia and Saudi Arabia, respectively second and third largest producer in the world behind the United States.
Last March, it was the disagreement between Riyadh and Moscow, leading to a short but intense price war, which caused crude prices to stumble for the first time before the saturation of storage capacities further precipitated them. more, to negative ground for WTI.
The climate is now calmer, and the Saudi and Russian energy ministers showed their unity in mid-December during a bipartisan meeting.
“The OPEC + cooperation charter brought us together and brought good results (…) It is for this reason that it must continue”, then declared the Saudi Minister of Energy Abdelaziz ben Salman.
His Russian counterpart Alexander Novak, in charge of the energy sector, had also insisted on the importance of “working together in order to achieve a balanced situation on the market”.
– Fragile demand –
However, it is difficult to predict how oil demand will develop, depressed by the Covid-19 pandemic.
In its latest monthly report, the cartel forecasts a rebound less than expected and notes “the high uncertainties, mainly with regard to the development of the Covid-19 pandemic and the deployment of vaccines”. He also wonders about “the structural effects of Covid-19 on consumer behavior, in particular in the transport sector”.
Other voices want to be more optimistic: Price Futures Group analyst Phil Flynn, for his part, believes that demand will recover before production this year, especially in the United States.
Nevertheless, the offer proposed outside the framework of the OPEC + agreement remains significant: that of the United States is still 11 million barrels per day and Libya, a member of the cartel but exempted, has more than doubled the his in November following the ceasefire signed in the country, according to the cartel.