Members of the Organization of Petroleum Exporting Countries (OPEC) and their allies led by Russia, known as OPEC+, may further hold back oil supplies amid concerns over demand.
The coalition is leaning towards maintaining crude oil production cuts at the current level of 7.7 million barrels per day (bpd) for another two or three months, the Wall Street Journal reported citing officials. Similar intentions were earlier reported by Reuters, who cited delegates and sources close to OPEC+.
The group is expected to hold informal talks on Sunday before making the final decision on the fate of production curbs at a ministerial gathering next week. The informal online meeting was reportedly requested by OPEC’s de-facto leader Saudi Arabia and one of the main non-OPEC parties of the deal, Russia.
OPEC+ was scheduled to start adding 2 million barrels per day (bpd) to the market – about 2 percent of global consumption – in January, according to the next stage of their historic oil accord. Some of the largest crude suppliers, including Russia, earlier signaled that the cuts could be extended if necessary.
This weekend’s unofficial meeting comes after oil prices secured gains for a fourth straight week. Despite edging lower on Friday, futures for West Texas Intermediate (WTI) were up eight percent over the week, while Brent rose more than seven percent.
The price rebound may be driven by optimism about the possible rollout of a Covid-19 vaccine, as several companies announced over 90 percent effectiveness of their products earlier this month. Meanwhile, some analysts warn that oil market fundamentals are still weak, and demand is not expected to get back to pre-pandemic levels for another year.
“It is far too early to know how and when vaccines will allow normal life to resume. For now, our forecasts do not anticipate a significant impact in the first half of 2021,” the International Energy Agency (IEA) said in its report.
However, not all the OPEC+ members could be in favor of extended cuts despite those concerns. The United Arab Emirates (UAE), which was recently rumored to be considering withdrawing from OPEC, is reportedly eager to ramp output back up and asked for a higher production quota. Nigeria, criticized by other members for failing to comply with the deal, also wants a higher quota. Another key breakaway from the deal and the second-largest OPEC producer, Iraq, was previously seeking an exemption from 2021 reductions.
OPEC+ would still push all the overproducers to compensate for extra supplies, some delegates quoted by the Wall Street Journal said. In addition to non-complaint parties of the deal, OPEC+ efforts are partly hindered by the resumption of oil production in Libya. Being exempt from the current oil curbs, Libya has recently boosted oil output by over 1 million barrels per day.
For more stories on economy & finance visit RT’s business section