MOSCOW / LONDON (Reuters) – OPEC sees many downside risks for oil markets in the first half of 2021, its secretary-general said on Sunday, the day before meeting with Russian-led allies to discuss production levels in February.
“Amid the signs of hope, the prospects for the first half of 2021 are very mixed and there are still many negative risks to be faced,” said OPEC Secretary-General Mohammad Barkindo.
He was speaking at a meeting of OPEC experts and allies, a group known as OPEC +, according to comments published by OPEC.
OPEC + will meet on Monday.
In December, OPEC + decided to increase production by 0.5 million bpd from January as part of the gradual increase of 2 million bpd this year, but some members questioned the need for a new boost due to the spread of infections by coronavirus.
“Given that the fundamentals are weakening, it would be prudent for OPEC + to keep production steady and there is a preference among some of the biggest producers to keep production stable,” said Amrita Sen, co-founder of the Energy Aspects think tank.
The OPEC leader, Saudi Arabia, suggested a more cautious approach during previous meetings, while the United Arab Emirates and non-OPEC Russia said they preferred a faster increase.
“Restrictions on social and economic activity remain in place in several countries, and there is concern about the emergence of a new harmful strain of the virus,” said Barkindo.
He said the global economy could recover strongly in the second half of 2021, but sectors such as travel, tourism, leisure and hospitality could take years to reach levels prior to the virus.
OPEC + was forced to cut production to a record high in 2020 as global blocking measures hammered demand for fuel.
OPEC + first cut production by 9.7 million bpd, then cut back to 7.7 million and finally to 7.2 million from January.
Barkindo said that OPEC now expects global oil demand to be led by developing countries and increase to 95.9 million bpd in 2021, or 5.9 million bpd from 2020, as the global economy is expected to grow 4.4%.
Although the development of vaccines against coronavirus has aroused market optimism, the increase in demand would not yet bring consumption to pre-pandemic levels of around 100 million barrels per day.
OPEC’s last forecast in December was less than the previous forecast of an increase of 6.25 million bpd in 2021 because of the prolonged impact of the coronavirus pandemic.
Brent crude prices ended 2020 above $ 50 a barrel – more than a fifth below the annual comparison, but more than doubling since April lows, as producers cut production and the United States and the European Union approved trillion in stimulus packages. [O/R]
Reporting by Vladimir Soldatkin and Olesya Astakhova in Moscow, Alex Lawler and Ahmad Ghaddar in London and Rania el Gamal in Dubai; Written by Dmitry Zhdannikov; Editing by Alison Williams, Susan Fenton and Alexandra Hudson