OPEC officials will meet this week on Wednesday, Thursday, and Friday to iron out details ahead of the meeting on November 30 and December 1 that will determine the fate of OPEC’s oil producers for 2021. OPEC sources told Reuters on Monday.
Wednesday and Thursday will see OPEC’s economic commission board gather together, and Friday will bring together non-OPEC technical experts.
The topic of discussion? In part, the level of production cuts that will be in effect come January 1, 2021.
As it stands right now, the current level of production cuts are set to ease as of January 1. But most industry analysts and experts agree that oil demand—which has failed to fully recover from its pandemic levels—does not support OPEC lessening its production cut mandates in January.
“The OPEC+ ministers will probably agree to extend current production for the first quarter of 2021,” one OPEC delegate told Reuters.
What OPEC is hoping for is that a vaccine will boost economic activity and therefore oil demand. But precious little was said about a vaccine in their MOMR this month.
OPEC is currently cutting 7.7 million barrels per day, with plans to decrease those cuts to just 5.7 million bpd in January.
Even if a vaccine is approved for emergency use this month, it is unlikely to have any meaningful effect on oil demand until the second half of 2021.
OPEC member Libya has stated that it does not intend to be part of the OPEC production cuts until such a time when its oil production has stabilized at 1.7 million bpd. It is currently producing about 1.25 million bpd. This could be a sticking point in the upcoming meetings, along with non-compliant Iraq.
By Julianne Geiger for Oilprice.com