Connect with us

Hi, what are you looking for?

Capital Business
Capital Business
Organization of the Petroleum Exporting Countries (OPEC)/AFP

World

New Year OPEC+ meeting to decide production levels

LondonUnited Kingdom, Dec 2 – Members of the OPEC group of oil producers and their partners will meet via videoconference on Monday to decide on production levels for February, hoping to turn the corner on a difficult year.

The OPEC+ ministerial meeting comes after oil consumption tanked in 2020 due to the Covid-19 pandemic and a price war between Saudi Arabia and Russia.

Despite a pick up in prices towards the end of last year, the market levels for black gold remain uncertain.

After their last summit, from November 30-December 3, the OPEC+ members agreed to increase production by half a million barrels per day in January.

Also at that meeting the 13 members of the OPEC cartel, led by Saudi Arabia, and their six allies, led by Russia, agreed to meet at the beginning of each month in order to decide on any adjustments to production volumes for the following month.

Russia and Saudi Arabia are respectively the second and third biggest oil producers in the world after the United States.

The decision illustrates OPEC’s desire to maintain a strong influence on the oil market and the gravity of the situation for crude producers last year.

 

– ‘Remaining demand uncertainty’ –

 

Advertisement. Scroll to continue reading.

Before the pandemic, OPEC members were content with two summits per year at the organisation’s headquarters in Vienna.

“Finally, we saw a strong demonstration of OPEC+ will and capability to manage the market, laying the groundwork for Brent’s recovery to over $50 per barrel despite remaining demand uncertainty in the market,” JBC Energy analysts said in a statement.

The two contracts of reference, North Sea Brent Crude and West Texas Intermediate (WTI) crude both ended the week around the $50 per barrel level, far lower than the prices seen at the start of 2020 but well up on the lows seen last year.

In March, Moscow and Riyadh embarked on a brief but intense oil price war which led prices to plummet.

On April 20, West Texas Intermediate (WTI) crude collapsed to minus $40.32 per barrel — meaning producers paid buyers to take the oil off their hands.

The climate between the two oil giants has eased since then, with the Russian and Saudi energy ministers meeting in mid-December in a display of unity.

It remains difficult, however, to predict the evolution in demand as governments begin rolling out vaccination programmes against the coronavirus.

Last month OPEC predicted a slight rebound in the market while noting continued uncertainties, particularly in the transport sector.

Despite the heft of the OPEC+ countries, countries outside the system have a major impact on the oil market; principally the United States which is still producing 11 million barrels of crude per day.

Advertisement. Scroll to continue reading.

Even within its ranks, OPEC will have to pay attention to developments in the three members which have been granted exemptions from quotas — Libya, Iran and Venezuela.

Libya’s production had been almost wiped out by civil conflict but has spiked since October after the signing of a ceasefire deal.

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...