OPEC Headquarters in Vienna, Austria

OPEC+ fails to agree on output-hike delay before expanded meeting

*Ministerial panel met Sunday before Monday’s full meeting as UAE, Kazakhstan oppose proposal to maintain current cuts

Isola Moses | ConsumerConnect

A panel of OPEC+ ministers couldn’t reach an agreement on whether to delay January’s oil-output increase, leaving the matter unresolved before a full meeting of the cartel and its allies from Monday, November 30 to Tuesday, December 1, 2020.

A delegate said most participants in an informal online discussion Sunday evening supported maintaining the production curbs at current levels into the first quarter, Bloomberg report said.

Still as Russian Deputy Prime Minister Alexander Novak spoke in favour of postponing the supply hike that’s currently scheduled to happen in 2021, the United Arab Emirates (UAE) and Kazakhstan were opposed, disclosed the delegate, who preferred to remain anonymous.

Report stated Brent oil in London declined 1.4% to $47.50 a barrel in early Asian trading last Monday.

Prices have advanced 27% this month, and are set for the biggest monthly gain since May 2020.

Unless the agreement is revised this week, they will restart about 1.9 million barrels a day of halted output, potentially pushing the global market back into surplus and undermining the recent surge in crude prices.

Mohammad Darwazah, an analyst at research firm Medley Global Advisors LLC, said: “Saudi Arabia will have to lean hard to get an agreement.

“There have been particularly acute rumblings of dissatisfaction with the status quo from Abu Dhabi.”

The Organisation of Petroleum Exporting Countries (OPEC) and its allies, a 23-nation network that 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, report stated.

ConsumerConnect had reported last Saturday that because of last-minute talks, Saudi Arabia and Russia had summoned a small group of OPEC+ countries for consultations at the weekend in an apparent effort at forging a consensus before making a final decision at a conference scheduled for Monday and Tuesday.

Despite the lack of an agreement so far, negotiations in the coming days could still result in a deal, said another delegate.

There have been numerous signals that the cartel was leaning toward a delay. Last week, Algerian Energy Minister Abdelmajid Attar, who this year holds OPEC’s rotating presidency, told Bloomberg that the group must remain cautious because the surge in oil prices to above $45 a barrel in New York this week could prove fragile. OPEC technical experts also considered data that pointed to the risk of a new oil surplus if the production increase goes ahead, report stated.

Prior to this weekend, a clear majority of OPEC+ watchers were expecting the group to keep pumping at current levels for a few months longer due to lingering uncertainty about the strength of demand.

However, the decision was reported to have been clouded by public complaints from Iraq and Nigeria, and private discord with the UAE, all of which have chafed at their output limits this year.

Harry Tchilinguirian, Head of Commodity Markets Strategy at BNP Paribas SA, said:  “As usual, it will all be down to the meetings behind closed doors on Monday and Tuesday.”

“We expect that Saudi Energy Minister Abdulaziz Bin Salman will be at the forefront of preserving group cohesion, to ultimately deliver the much expected delay to the tapering of supply cuts due next year.”

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