OPEC secretary general says ready to adjust oil output increases

OPEC+ Challenging Mission to Decide on Production Rates Suggests a Critical Year Ahead

Oil production in Russian Federation declined in 2020 for the first time since 2008, reaching its lowest level since 2011 following a global deal to cut output and sluggish demand caused by COVID-19.

Al-Fares will participate in the 25th meeting of the Joint Ministerial Monitoring Committee (JMMC) and the 13th Ministerial Meeting of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC countries, also known as OPEC+, which will be held on Monday, today, through videoconference. US West Texas Intermediate crude touched $49.71 a barrel, the highest since February 2020.

Opec+ was forced to cut production by a record amount in 2020 as global lockdown measures against the virus hammered demand for fuels.

An OPEC document dated January 4, showed the group was studying a 500,000 barrel per day (bpd) cut for February, and other scenarios that include stable production or an increase of 500,000 bpd.

January's 500,000 bpd rise in output narrowed OPEC+ cuts to 7.2 million bpd.

April volumes are to be decided at an OPEC+ meeting in early March.

Kuwait's oil minister also said on Monday that he expected a gradual recovery in oil demand, particularly in the second half of 2021, as many countries around the world start to distribute coronavirus vaccines.

Fitch Solutions said the OPEC balancing act will seek to return barrels to market as quickly and prudently as possible to ensure expanded market share without having prices rise too quickly, which would encourage non-OPEC production, or adding excess downside price pressures by contributing to elevated storage levels.

However, the EIA expects that high global oil inventory levels and surplus crude oil production capacity will restrain oil prices from going up through much of 2021.

Amid an increasingly hard environment for projections, the oil market is expected to face challenging times during 2021, but news of successful vaccines have restored some hopes of a return to business as usual during the first quarter of the year, not only restoring worldwide travel but also boosting the tourism sector, which will eventually reflect positively on the oil industry.

"We see an increasing number of COVID-19 daily infections in Europe and the partial lockdowns are still in effect, which is likely to cast their shadow on the oil market in the first quarter of 2021", said Youssef. In addition, a new Joe Biden administration in the United States could play a pivotal role in triggering a modest increase in Iranian barrels in the market.