OPEC + negotiations stopped on Monday after the group failed to reach a consensus on the best way forward for oil production, the agency said on Monday afternoon.
The OPEC and non-OPEC Ministerial Meeting held on Monday will resume on Tuesday, January 5, giving the group more time to discuss among themselves and reach some kind of agreement on oil production in February.
The group has not been able – until now – to reach an agreement, with some countries lobbying strongly for an increase in production of 500,000 barrels per day and others hoping to stay on course due to still weak demand and small signs of an increase such as blockages and a new extra-virulent strain of Covid-19 begins to spread in more countries. The group’s two heavyweights, Russia and Saudi Arabia, are again at the opposite end of the spectrum, with Saudi Arabia lobbying the group to reverse the additional production launched in January of 500,000 bpd, and Russia expecting a substantial increase 500,000 bpd. The gap between them is now 1 million bpd. Saudi Arabia said, however, that it would accept to continue the course in February.
Supporting Saudi Arabia’s position are Oman, Iraq, Algeria, Nigeria and Kuwait. Supporting Russia’s position is Kazakhstan.
These two members are the ones that most influence the group, with Saudi Arabia being the swing producer. And it was these two members who also lowered oil prices in March, when they discussed the same issue. This dispute involved the two countries increasing oil production to the point of further saturating an oil market already saturated before months and months of blockages that ended the demand for oil.
Prior to Tuesday’s meeting, the groups will hold bilateral negotiations and will be able to consult with their own governments, delegates said, according to Reuters.
The market should prepare for more volatility this year, courtesy of OPEC, with meetings scheduled to be held monthly.
By Julianne Geiger for Oilprice.com
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