OPEC+ Deliberations Ongoing

The 13^th OPEC and non-OPEC ministerial meeting has been adjourned until January 5, OPEC has announced.

The meeting, which commenced on January 4, is currently scheduled to resume at 3.30pm (Vienna time), according to an OPEC statement.

Commenting on OPEC+’s deliberations, Rystad Energy’s Oil Markets Analyst, Louise Dickson, outlined that two clear factions have formed; the Saudi-led proposal for a cautious approach to maintain oil prices and the Russia-led call for a swifter return of supply to the market. The final policy will decide whether or not OPEC+ will up its output by a collective 500,000 barrels per day in February.

“The division is a blow to the alliance, raising again the question of whether or not its members, with very different agendas and production structure, can continue to work together. But more often than not, a deal is agreed upon in the end,” Dickson said in a statement sent to Rigzone.

“Russia’s warning that OPEC+ may lose market share if they fail to increase this very moment is probably a bit over-stated. In a year with supply fluctuations in the millions of barrels and bruised upstream potential, a month of more restrained output from OPEC+ will not tip the balance so far that the cartel is unable to claw back barrels from shale in a month’s time,” Dickson added.

“A roll-over would certainly incentivize increased drilling in the U.S. shale patch, but this is nothing that OPEC+ cannot correct at next month’s meeting,” Dickson went on to say.

The Rystad Energy representative confirmed that Monday’s “OPEC+ drama” steered the latest oil price downgrade but warned that the “heavier hand” is likely the still unknown impact of the new virus strain on economic activity and travel.

As of January 4, 5.33pm CET, there have been 83.9 million confirmed cases of Covid-19 globally, with 1.8 million deaths, according to the latest figures from the World Health Organization.

To contact the author, email andreas.exarheas@rigzone.com