The world's largest oil producers on Monday started the meeting where they will discuss the much-expected production cut strategy which includes whether to ease or extend the output cuts to balance the global oil market.
The pandemic continues to rage, with cases increasing in many regions around the world, adversely impacting the global economy and the world energy markets in an "unprecedented manner," said Abdelmadjid Attar, Algeria's Minister of Energy and President of the Organization of Petroleum Exporting Countries (OPEC) Conference at the opening session of the 180th ordinary meeting by OPEC.
"The shock to the oil industry is massive and its severe impacts will likely reverberate in the years to come," he said.
Attar said the second wave of the pandemic and related lockdowns put a damper on demand, lowering the global oil demand for 2020 to an estimated 9.8 million bpd.
Recalling the recent positive COVID-19 vaccine developments, Attar said the effects of the vaccines will likely begin to be significantly apparent in the second half of 2021 as the global deployment of vaccines will take time.
"The road to recovery is long and bumpy. It requires great patience. However, there are signs of light at the end of the tunnel," Attar said, adding that the global economy is forecast to return to growth, expanding by an estimated at 4.4%, and oil demand growth is expected to be high, in the tune of 6.1 million bpd.
Attar said the brighter outlook for 2021 which creates a cautious optimism indicates that "we are on the right path."
- OPEC agreement
As a solution for the lackluster oil demand caused by the global pandemic, the OPEC+ group agreed in April to collectively lower the group's total oil production by 9,7 million bpd from May 1 to June 30.
In line with the April agreement, the OPEC+ lowered their crude oil production cut to 7.7 million bpd from Aug. 1 to Dec. 31, with one month delay as 9.7 million bpd which was supposedly to be effective until June 30 was extended due to the worsening pandemic situation.
According to the same deal, which expires on April 30, 2022, the group was expected to pare that amount further by around 2 million bpd to 5.8 million bpd as of Jan. 1, 2021. However, the group now plans to keep the current production levels for at least three months due to the weakened oil demand outlook caused by the acceleration in COVID-19 cases and oversupply in Libya.
By Sibel Morrow and Firdevs Yuksel