Ministers of the monitoring committee of the OPEC+ countries will gather on Monday for another video meeting to discuss oil production cuts. This will be the fifth negotiations since the start of the unprecedented crisis in the oil market, which saw global fuel consumption plunged by 10% this year. This time, the topic for consultations is not only the current results of the deal but also the market development scenarios in 2021 - according to TASS sources, OPEC+ does not rule out an oversupply of oil and weak demand.
The agreement to cut oil production in its latest iteration has been in effect since May 2020. At the first stage of the deal, the alliance countries agreed to reduce oil production by 9.7 mln barrels per day (bpd). But from August to the end of December 2020, the volume of restrictions decreased to 7.7 mln bpd. Initially, it was assumed that in the second half of the year, the demand for oil, which suffered in spring due to restrictive measures around the world, will recover. Therefore, from January 2021, only 5.8 mln bpd will fall under the cut.
However, in October, OPEC and IEA in their monthly reports did not improve the forecast for the year, retaining the forecast for a decline of 8.4-9.5 mln bpd. Demand growth began to recover this summer after quarantine measures have been lifted, but with the second wave of the pandemic around the world and new isolation measures, the pace of recovery is slowing down once again, the IEA noted. OPEC Secretary General Mohammad Barkindo said earlier that the recovery in oil demand is progressing at a slower pace than expected.