OPEC and its allies headed into a two-day meeting with ministers still split on plans to delay a production boost, after failing to reach consensus in talks on Sunday night. The 23-nation coalition led by Saudi Arabia and Russia is debating whether to maintain the output cuts at current levels, deferring the increase scheduled for January. Some members are concerned that global markets remain too fragile to absorb additional barrels, while others are keen to sell more crude.
The UAE hasn’t commented publicly on its stance, and officials from the country say privately that they haven’t decided on a position. Tensions between the emirates and the Saudis, traditionally stalwart partners, have emerged as Abu Dhabi grows impatient to use new production capacity it has built, and launch a regional oil benchmark contract.
If OPEC+ doesn’t revise its current accord, they’re due to add 1.9 million barrels a day to world markets, potentially derailing the recent rebound in crude prices. Brent futures are trading near $47 a barrel in London.
As the Organization of Petroleum Exporting Countries and its partners prepare for their private sessions — which commence at 2 p.m. Vienna time — the usual negotiating and counter-proposals that precede meetings are in full swing. Besides the central proposal of a three-month delay, two months has also been floated, as has the idea of gradually increasing over a three or four-month period, delegates said.
OPEC+, which pumps more than half the world’s crude, made vast production cuts during the depths of the pandemic to offset a historic collapse in fuel demand. The alliance had planned to ease some of those curbs at the start of 2021, in anticipation of a global economic recovery.
While a breakthrough in vaccines to tackle the coronavirus propelled oil prices to an eight-month high, a resurgence in infections has triggered a new wave of lockdowns and inflicted a fresh blow to fuel consumption. The cartel and the wider industry have downgraded their outlooks for 2021, with a picture thats sharply polarized between recovery in Asia and stagnation in Europe.
Over the past few weeks, leading figures in the OPEC+ alliance such as Saudi Energy Minister Prince Abdulaziz Bin Salman and group president, Algeria’s Abdelmajid Attar, have signaled the producers would adjust the planned supply increase.