The meeting with OPEC+ was set to resume on Tuesday, but a late and a rather surprising announcement came in the afternoon saying that the meeting had been rescheduled to December 3 as more talks are needed, TLTP has learnt.
Earlier, the OPEC meeting ended on Monday without an agreement among its members regarding the production cuts next year. Instead, the meeting ended with three of its heavyweights—Russia, Saudi Arabia, and the UAE—holding different opinions as to how to handle things going forward.
Oil prices fell on Tuesday after an OPEC meeting to decide on production policy failed to reach a consensus and was delayed amid concerns about oversupply and weak demand. International benchmark Brent crude oil was trading at $47.49 per barrel at 0648 GMT for a 0.81% drop after closing Monday at $47.88 a barrel. American benchmark West Texas Intermediate was at $44.98 per barrel at the same time for a 0.79% fall after it ended the previous session at $45.34 a barrel.
Oil prices have gained more than 27% in November with rising hopes for a quicker economic and oil demand recovery instilled by the successful coronavirus vaccines. Investors were also waiting for the outcome of the OPEC+ meetings expecting at least a three-month extension of the current production cuts of 7.7 million barrels per day (bpd). Convened on Monday, the 180th ordinary meeting by OPEC countries failed to reach a consensus and the group agreed to meet again one day later.
Production cuts are supposed to be lowered by around 2 million bpd to 5.8 million bpd as of Jan. 1, 2021 in line with an agreement in April. But experts say OPEC+ meeting on Tuesday was postponed due to some dissenting voices from OPEC ranks. These countries, including the ones with strained economies, are in favor of a higher production level.
Saudi Arabia has been reported as the predominant and perhaps only swing producer in the group is said to favor an extension of the current level of oil production cuts, according to sources. Russia, the country that sank the deal in March over a similar issue, is said to favor a gradual increase in production starting in January. The UAE, OPEC’s third-most prolific oil producer, is okay with extending the production cuts as-is into January and beyond only after all other OPEC members comply with their cuts.
This was precisely what the UAE’s Energy Minister said a couple of weeks ago as well. The UAE made headlines last week after its largest state-run oil company, ADNOC, was rumored to be questioning the wisdom of its OPEC membership during these tough times.
The UAE’s Energy Ministry later issued a statement stressing the fact that it had always been a committed member of OPEC. The UAE either met or exceeded its 2.59 million bpd quota in September and October, according to OPEC’s Monthly Oil Market Report, but fell short of its goal in August.
The issue being bandied about is whether OPEC+ members should continue on with its current level of production cuts, or whether they should ease up on the production cuts by 2.0 million bpd as the group had originally planned—or some variation of these scenarios.
Most analysts suspect the group will eventually decide on a three-month extension of the current level of production cuts.
Pertinently mention that speaking at the opening session of the 180th ordinary meeting by OPEC on Monday, Algerian Energy Minister Abdelmadjid Attar recalled positive COVID-19 vaccine developments and said the effects of the vaccines will likely begin to be significantly apparent in the second half of 2021 as the global deployment of vaccines will take time.
