The OPEC+ alliance should remain cautious at its upcoming meeting Jan. 4 because a new strain of the coronavirus that causes COVID-19, B117, is likely to weigh on global oil demand outlook at the beginning of 2021, the Algerian energy minister Abdelmadjid Attar said in a Dec. 27 interview with French daily El-Watan.
The Joint Ministerial Monitoring Committee, co-chaired by Saudi and Russia, will convene virtually Jan. 4 to track compliance with quotas and advise on policy. OPEC+ ministers will also meet virtually after the JMMC meeting to decide on output volumes for February, in line with an earlier decision to make more gradual output adjustments.
The oil market stability “is currently slightly affected by the uncertainties hanging over the mutation of the COVID-19 virus and the success of vaccinations around the world, which have even resulted in increased containment, but also weak demand for oil in general at the start of the year,” Attar, who is current OPEC President, told El-Watan.
“This is why we must remain cautious during the next JMMC meeting on Jan. 4,” he added.
At the coalition’s last meeting Dec. 3, OPEC+ members agreed to raise collective output by about 500,000 b/d from January and to convene monthly to determine subsequent levels. Ministers decided to taper cuts in January by hiking production by 500,000 b/d instead of the 1.9 million b/d boost originally slated for the month, due to the weak global oil demand outlook.
“We have agreed not to increase OPEC + production by more than 500,000 b/d, and this is the position that we will defend in the interest of all producers, because it will take several more months for there to be a significant start in mobility and oil demand around the world,” Attar said.
Russia will call for another 500,000 b/d oil production increase by the OPEC+ alliance starting February if market conditions remain stable, deputy prime minister Alexander Novak said Dec. 25.
Oil prices rallied after the December OPEC+ meeting, with Brent hitting a nine-month high as the coalition committed to the partial quota extension. Since then, prices have jumped above $50/b for the first time since March amid hopes of better global oil demand outlook with the rollout of COVID-19 vaccines.
“It must be recognized that the price of a barrel could only be stabilized thanks to the perfect cooperation of all its members, and compliance with production quotas up to 100%, despite some deviations for which compensation has taken place or must take place by the countries concerned,” Attar said.
“We also avoided increasing production by 2 million b/d as of January 1, 2021, and that’s what kept the price up with even a slight increase beyond $50/b.”