A possible widening of OPEC + supply cuts could avoid further price drops as countries continue battling COVID-19.
OPEC member Algeria spoke out in favor of postponing a planned increase in OPEC + oil production from January, one day after the Russian energy minister raised the possibility with the country’s oil companies.
Algeria, which holds the presidency of the Organization of Petroleum Exporting Countries, supports a possible extension of OPEC + supply cuts in the first few months of 2021 to avoid further price drops, the country’s energy minister said Tuesday.
OPEC and its allies, led by Russia, collectively known as OPEC +, are set to reduce cuts from 7.7 million barrels per day (bpd) by nearly 2 million bpd from January.
The Algerian energy minister Abdelmadjid Attar told the state news agency APS that a second wave of the COVID-19 pandemic had put the oil market in a “very dangerous” situation.
On Monday, top managers of Russian oil companies and Russian energy minister Alexander Novak held talks about the possible postponement of a relaxation of the restrictions to the first quarter of 2021, said two industry experts.
According to the sources, the final decision on oil production will be made by Russian President Vladimir Putin, who last month didn’t rule out extending deeper oil cuts for longer if market conditions warranted.
At a ministerial meeting last month, Saudi Arabia, OPEC’s largest producer, said no one should doubt the group’s commitment to supporting the market.
“We will not evade our responsibility in this regard,” said the Saudi energy minister, Prince Abdulaziz bin Salman.
Given the mounting coronavirus cases in Europe and the US and the fact that new government mobility restrictions are affecting oil demand, analysts say OPEC + measures to support the oil market are likely.
“We believe additional supply from OPEC + may not be needed yet and the alliance may choose to postpone the decision to taper by a quarter,” JP Morgan said last week.
OPEC + is expected to meet on November 30th and December 1st to set guidelines.
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