With OPEC+ due to meet on January 4th, OPEC members voice concern about the outlook for oil production in the first half of 2021, with Secretary-General of OPEC, Mohammad Barkindo, claiming: “amid the hopeful signs […] there are still many downside risks to juggle.”
In December, Russia and the Organisation of Petroleum Exporting Countries (OPEC), a group known as OPEC+, decided to increase oil production by 500,000 bbl/d from January 2021 to ease fears of oversupply. However, as coronavirus infections continue to increase, some members of OPEC+ are now questioning the need for a further boost.
Amrita Sen, co-founder of Energy Aspects think-tank said: “given fundamentals are weakening, it would be prudent for OPEC+ to hold output steady and there is a preference among some of the biggest producers to hold production flat.”
Even though the development of various coronavirus vaccines has created optimism within the market, Barkindo estimates it could take years to reach pre-virus production levels of around 100 million bbl/d due to the impact of the virus on sectors such as travel, tourism, leisure, and hospitality.
While the global economy is predicted to grow throughout 2021 by 4.4% and OPEC is expecting global oil demand to rise to 96.9 million bbl/d, this number is still over 3 million bbl/d below pre-virus consumption, causing members of OPEC to question the decision to increase oil production throughout the year.
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