OPEC+ to Conduct New Round of Oil Cut Consultations on Today

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Photo taken on April 9, 2020 shows pump nozzles at a gas station in Brussels, Belgium. The Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, known as OPEC+, reached on Thursday a tentative agreement to cut production to stop a market free-fall amid the coronavirus pandemic, pending the consent of Mexico. (Xinhua/Zhang Cheng)
(Xinhua/Zhang Cheng)

The 25th meeting of the OPEC Conference and the OPEC and non-OPEC Ministerial Meeting is set to convene online on Wednesday to decide on the volume of oil production cuts.

In July, the OPEC+ countries agreed to phase out 5.8 million barrels per day (mbd) of oil production cuts by September 2022, increasing oil production by 400,000 barrels per day (bpd) every month starting August. For the month of December, the compliance with production adjustments for the OPEC+ countries was estimated at 121% by the International Energy Agency (IEA). Russia’s compliance level was at 107%, and Saudi Arabia’s level was at 101%, the IEA said.

The OPEC+ member states held previous consultations online on January 4. The participants reaffirmed their decision to keep up overall monthly oil production increase as well as the importance of adhering to full conformity and the overproduction compensation mechanism.

Just like the proceeding ministerial meetings, Wednesday’s meeting will focus on the parties’ compliance with output cuts prescribed by the deal, as well as decide whether or not to approve the next quota increase.

Meanwhile, the world oil supply is also expected to grow in 2022 by 6.2 mbd as oil output from OPEC+ countries could increase by 4.4 mbd, provided the alliance fully lift its cuts, the IAE stated in its latest oil market report. The prediction for non-OPEC+ nations remains at 1.8 mbd.

The agency also noted a persistent oil demand, which rose 1.1 mbd to 99 mbd in last year’s fourth quarter, despite the spread of the Omicron variant. Nevertheless, the IAE predicts a seasonal decline in the first quarter of 2022, boosted by remote work and less air travel. The IEA expects to see 3.3 mbd growth in global demand because of softer COVID-19 restrictions.

The OPEC+ production cut deal was reached in April 2020 by 23 countries, including 10 OPEC members, amid the precipitous drop in oil demand as coronavirus-related shutdowns were taking place worldwide.

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