London — Leading OPEC+ ministers vowed again to remain flexible on production policy as a key committee met Nov. 17 to discuss how much oil to pump in an uncertain market for 2021.
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The producer alliance has been cheered by recent news of advances in developing a coronavirus vaccine, as well as signs of a robust economic recovery in China and India.
But this has been counterbalanced by a surge in infections that has prompted many western economies to reimplement lockdowns as well as the rapid recovery of war-torn Libya's oil industry.
The mixed outlook has ministers mulling a postponement of their scheduled 2 million b/d production increase in January, with delegates telling S&P Global Platts that options for a three- or six-month extension of current quotas would be discussed.
"There is still a ways to go before we reach the other side of the pandemic," Saudi energy minister Prince Abdulaziz bin Salman said, warning his OPEC+ counterparts that the oil market could punish prices if they did not remain disciplined on how much they produced.
"We must maintain high compliance while retaining the flexibility and nimbleness to adjust our commitment in changing market conditions," he said in his opening remarks to the meeting. "We as a group do not want to give the market any excuse to react negatively...This is why we must be prepared to act according to the requirements of the market."
The nine-country Joint Ministerial Monitoring Committee, co-chaired by Prince Abdulaziz and Russian energy minister Alexander Novak, is tasked with assessing market conditions and advising the entire OPEC+ coalition, which is scheduled to meet Nov. 30-Dec. 1 to make a final decision on 2021 production quotas.
Novak, who was recently promoted to deputy prime minister but will remain Russia's top liaison to OPEC+, said the committee's aim was to identify key uncertainties in the oil market and provide "balanced recommendations" for the alliance to consider.
"We have to track not just the current situation and the current state of the market but the deeper transformational trends in the sector and how COVID will be affecting them after the pandemic is over," he said, pointing to the aviation sector as one that could be permanently impaired.
Russia remained committed to working with OPEC+ and would fulfill its agreements, Novak added.
Ministers praised the high overall compliance levels achieved by members to their quotas, but said previous overproduction needed to be made up through "compensation cuts" under the terms of the deal.
So far, only the UAE and Angola have made significant progress among the 11 members that owe compensation, Prince Abdulaziz said.
"I urge all participants of the Declaration of Cooperation to renew their determination to abide by the terms of the agreement that have greatly contributed to the balancing of global markets," he said.
Even so, he criticized the market for its cynicism of OPEC+ resolve. Having previously warned short-sellers to "make his day," Prince Abdulaziz said he would prefer the market focus on the alliance's achieved cuts, which he said had removed 1.6 billion barrels since May.
"We have achieved 99.5% of what we set out to do," he said. "While the glass is 99.5% full, some would rather fixate on the 0.5%, on the droplets of water at the very rim of the glass."