OPEC member countries meet over oil production

Members of the Organization of the Petroleum Exporting Countries (OPEC) held a virtual meeting over an extension to oil production cuts as COVID-19 continues to weigh on global demand.

Ministers from the cartel commenced the meeting via video conference at 1 pm GMT on Monday as the 13 members of OPEC want to avoid a repeat of the collapse in prices seen in April at the beginning of the pandemic.

They will be joined on Tuesday by their allies, including Russia, who form the OPEC+ grouping in order to keep afloat a crude market devastated by the Covid-19 pandemic and which is slowly recovering from the depths into which prices plunged at the end of April.

According to the current deal, a cut of 7.7 million barrels per day (bpd) is meant to be eased to 5.8 million bpd in January 2021, but most observers expect this to be extended by between three and six months.

The current deal was reached in April but since then producers have had the second wave of the pandemic to take into account.

Key players within the grouping have hinted in recent weeks that an extension is on the table despite encouraging news from trials for vaccines by pharmaceutical companies like AstraZeneca, Pfizer/BioNTech and Moderna.

Despite a recent rise in prices, and experts agreeing that an extension is most likely, OPEC and its 10 allies have been on odds in the past.

Those exceeding their allotted output — foremost among them Iraq and Nigeria — regularly come in for a scolding from Prince Abdelaziz bin Salman, energy minister of OPEC kingpin Saudi Arabia.

Crude oil prices have picked up by 25% since the beginning of the month and have returned to roughly their pre-pandemic levels of between 45 and 50 dollars per barrel for both the US benchmark, West Texas Intermediate, and Europe’s Brent North Sea contracts.

However, signs of disunity in OPEC raised the prospect of the group not agreeing to an extension of current production cuts. Some members, including UAE and Iraq have expressed misgivings about supply policy.