The ministers of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries, known as OPEC+, convened for the 15th OPEC and non-OPEC Ministerial Meeting on Thursday to discuss their production policy after April amid oil demand uncertainties from rising virus cases that are forcing European countries to take stricter mitigation measures.
"Last month, OPEC+ called for a cautious and restrained approach and unfortunately it has been proved right by subsequent developments," Saudi Arabia's Energy Minister Abdulaziz bin Salman said during his opening speech.
"Those who said we were behind the curve and not being responsive to the needs of the market have now recognized that OPEC+ cautious position was the correct course of action," Salman said.
He warned that the reality remains that "the global picture is far from even, and the recovery is far from complete."
Hailing the compliance levels as "impressive" with new aggregate levels set at 113%, Salman stressed the importance of approaching the coming weeks with the same "admirable commitment."
"And until the evidence of the recovery is undeniable, we should maintain this cautious stance," he asserted.
He noted that stimulus measures are providing much-needed support to revive the global economy, and he said that even in those sectors that were badly hit, such as airline travel, signs of meaningful improvement are there.
"But the waves are still tall and the sea remains rough," Salman warned, pointing to infection rates in the Eurozone, and countries that are re-imposing full or partial lockdowns and extending restrictions to combat a third wave of the coronavirus.
-Oil market short of 2 million bpd of output
Russian Deputy Prime Minister Alexander Novak, however, expressed optimism and said since the last OPEC+ meeting the situation has significantly improved.
Stressing the market was short of about 2 million barrels per day (bpd) of production, Novak said the global economy is expected to gain 5% in 2021, citing leading global economists, which he said would give way to positive signals in oil demand.
"Based on the JMMC [Joint Ministerial Monitoring Committee] data which we reviewed yesterday, 5.5 million bpd of oil recovery is expected in 2021," Novak said.
He also pointed to uncertainties ahead and said monitoring is needed regarding the pace of vaccination and lockdowns.
"The vaccination campaign and ongoing rollout of new vaccines are yielding results, and we're seeing a significant number of people already being vaccinated. This gives us a lot of optimism, and looking into the future we have to monitor carefully the new waves of the virus, and possible lockdowns associated with it," Novak said.
On March 4, OPEC+ members rolled over existing production quotas until April. However, Kazakhstan and Russia were excluded and allowed marginal production increases by 130,000 and 20,000 bpd, respectively due to ongoing seasonal consumption patterns. Saudi Arabia also decided to keep its voluntary cut of 1 million bpd.
Including Russia and Kazakhstan's output rise exemption, the group agreed to reduce its production by 7.9 billion bpd in April.
Previously in February and March, Russia and Kazakhstan collectively increased their output by 75,000 bpd while the rest of the group held output steady.
By Ebru Sengul Cevrioglu and Sibel Morrow