Page 8 - NorthAmOil Week 10 2021

NorthAmOil COMMENTARY NorthAmOil

OPEC+ largely maintains

cuts with new deal

OPEC+ members agreed to add only 150,000 bpd of output

in April, with Saudi Arabia having pushed hard to maintain

restraint among its partners

GLOBAL OPEC and its partners in the OPEC+ group However, since taking drastic action to rebal-
decided at last week’s meeting to largely maintain ance the market when it collapsed in early 2020
WHAT: the output cuts they committed to in January in a amid intentional oversupply and the corona-
The group elected to move that took the market by surprise. virus (COVID-19) related impact on demand,
keep the production cuts Aside from Russia and Kazakhstan, the group Riyadh has pleaded for caution. Saudi Energy
largely unchanged as it will continue to limit output by the same lev- Minister Prince Abdulaziz bin Salman Al Saud
seeks to maintain price els agreed at the start of the year, with de-facto has repeatedly voiced his concern about easing
stability amid uncertainty leader Saudi Arabia having pushed hard for the restrictions, suggesting that it was not the
about the global greater compliance and caution amid uncer- time to turn on the taps. Growing COVID-19
economic recovery. tainty about the recovery of demand. This case numbers in Europe, in particular, were
means OPEC+ output will be restricted by highlighted as providing sufficient concern for
WHY: around 7mn barrels per day (bpd) throughout the group to remain nervy. Meanwhile, with
The anti-COVID-19 April, plus Saudi’s additional voluntary 1mn the continent’s vaccine rollout having made a
vaccine rollout has yet bpd cut. stuttering start, worries are growing about the
to gain much traction Meanwhile, having already been allowed to outlook for travel during the summer holiday
in Europe, and there expand output by a combined 75,000 bpd dur- season.
are concerns about ing each February and March, Kazakhstan and Most traders and analysts had anticipated an
the outlook for travel Russia will raise production by 20,000 bpd and increase of around 500,000-1mn bpd after it
during the northern 130,000 bpd respectively, largely because of sea- emerged that the group was discussing such a
hemisphere’s summer sonal demand. hike. In retrospect, market watchers should per-
holiday season. haps have known better than to anticipate much
Against the grain movement. It is interesting to note that Iraqi Oil
WHAT NEXT: Prices have recovered sufficiently to bring Minister Ihsan Abdul Jabbar said in mid-Febru-
Saudi Arabia appears greater confidence to producers about the medi- ary that he anticipated that OPEC+ would keep
unlikely to remove its um-term outlook for the market, and with the things as they were at the March meeting.
voluntary 1mn bpd group’s members having seen their economies With prices rising to around $70 per barrel
cut next month, with a taking a battering over the past year, desire to following the announcement, the market is
gradual approach far ramp up output to take advantage of higher enjoying stability it has not seen for more than
more likely. prices was understandable. a year, both vindicating Prince Abdulaziz’s

P8 www. NEWSBASE .com Week 10 12•March•2021