OPEC+ was forced to reschedule its meeting as it could not reach a unanimous decision on key policies.
The OPEC+ talks have been delayed for 2 days after the meeting ended on Monday without an agreement among its members with respect to the production cuts next year.
The meeting however, ended with 3 of the group’s heavyweights; Russia, Saudi Arabia, and the United Arab Emirates (UAE) holding different opinions as to how to handle things going forward. This outcome shows the deep division that exists within the cartel after several hours of talk did not achieve any result.
The meeting with OPEC+ was scheduled for resumption for tomorrow, but a rather surprising announcement came later in the day saying that the meetings had been moved forward to December 3 as more talks are needed.
According to a report by Oilprice.com, Saudi Arabia, regarded as the predominant and perhaps only swing producer in the grop is said to favour an extension of the current level of oil production cuts, while Russia, the country that went against the deal in March over a similar issue, is said to favour a gradual increase in production starting in January.
On its own, the UAE, OPEC’s third-most prolific oil producer, is in support of extending the production cuts as-is into January and beyond only after all other OPEC members comply with their cuts. This was earlier alluded to by the UAE Energy Minister a couple of weeks ago.
The run-up to the meeting saw new cracks emerge in the relationship between UAE and other members of the cartel. Some informal discussions are expected to continue amongst members before the OPEC+ meeting on Thursday.
Ministers of the cartel are discussing whether to increase output in January as planned or maintain the current level of production levels for another 3 months. Some members of the group think the market is still too fragile to accept an increase in production, while others want to take advantage of the current rise in crude oil prices to increase production and boost their revenue.
The UAE’s Energy Ministry later issued a statement stressing the fact that it had always been a committed member of OPEC.
According to OPEC’s Monthly Oil Market Report, the UAE either met or exceeded its 2.59 million BPD quota in September and October, but fell short of its goal in August.
What you should know
- OPEC+ which is no stranger to disagreements had planned to ease some of its output cuts at the beginning of 2021 in anticipation of the recovery of the global economy after it had made huge production cuts in the wake of the coronavirus pandemic which had badly hit global oil demand.
- Although a breakthrough in Covid-19 vaccine development had seen oil prices hit an 8-month high, the second wave of infections particularly in Europe and the Americas has led to new lockdown measures that are affecting fuel consumption.
Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- chike.olisah@nairametrics.com.
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