After days of intense negotiations, members of the Organisation of Petroleum Exporting Countries (OPEC) yesterday agreed to sustain the curtailment of crude oil production through January , but with the deal now focusing on adjusting output from 7.7 million bpd to 7.2 million bpd.
The oil cartel also struck a deal to extend the deadline given to defaulting member countries to compensate for over-production till the end of March, 2020.
During an extraordinary meeting in April, the 23-member group agreed to begin curbing production by 9.7 million bpd on May 1, which was slated to extend through the end of June.
However, the cuts were expected to taper through the end of 2020, with 7.7 million bpd taken off, followed by 5.8 million bpd from January 2021 through April 2022.
But negotiations on the issue have been unusually tense amid a clash between Saudi Arabia and the United Arab Emirates, prompting a shift of the meeting till yesterday, due to the deadlock.
OPEC and its allies known as OPEC+ rescued the oil market this year from an unprecedented slump, slashing production as the pandemic crushed demand.
The meeting recalled the decision taken by all participating countries in the DoC at the 10th (Extraordinary) ONOMM on 12 April 2020 to adjust downwards overall crude oil production and the unanimous decisions taken at the 11th ONOMM on 6 June 2020.
It welcomed the positive performance in overall conformity levels to the production adjustments since it last met in June, and the constructive response from many countries to the compensation mechanism in accommodating their underperformed volumes as agreed at the June ministerial meetings, and later amended in September 2020.
Looking ahead, the meeting emphasised that it was vital that DoC participants, and all major producers, remain fully committed to efforts aimed at balancing and stabilising the market.
It noted that renewed lockdowns, due to more stringent Covid-19 containment measures, continue to impact the global economy and oil demand recovery, with prevailing uncertainties over the winter months.
“In light of the current oil market fundamentals and the outlook for 2021, the meeting agreed to reconfirm the existing commitment under the DoC decision from 12 April 2020, then amended in June and September 2020, to gradually return 2 mb/d, given consideration to market conditions.
“Beginning in January 2021, DoC participating countries decided to voluntary adjust production by 0.5 mb/d from 7.7 mb/d to 7.2 mb/d.
“Furthermore, DoC participating countries agreed to hold monthly OPEC and non-OPEC ministerial meetings starting January 2021 to assess market conditions and decide on further production adjustments for the following month, with further monthly adjustments being no more than 0.5 mb/d.
“The meeting also agreed to extend the compensation period established from the 11th ONOMM, and later amended in September 2020, for the period of January until the end of March 2021, to ensure full compensation of over production from all DoC participating countries,” a release at the end of the meeting noted.
OPEC and non-OPEC participating countries also urged Saudi Arabia’s Minister of Energy, Prince Abdul Aziz bin Salman to continue in his role as chair of the OPEC and non-OPEC ministerial meeting.
It stressed that Salman accepted the offer to continue in his role as chairman of the meeting and vowed to vigorously pursue the sustainable oil market stability desired by both producers and consumers.
By Emmanuel Addeh