MOSCOW (Sputnik) – The Organization of the Petroleum Exporting Countries (OPEC) will convene a biannual conference on Monday, which would be followed by the OPEC+ Ministerial Meeting on Tuesday, during which the participants would decide the future size of oil production cuts amid the market uncertainty.
Even though both OPEC and the International Energy Agency (IEA) forecast that 2021 would see a surge in oil demand of some 6 million barrels a day (mbd), the second wave of the pandemic has led to the reintroduction of lockdown measures in the Western countries, bringing the demand down. But the downfall has proved to be not as severe as it was in April due to the prompt recovery of demand in Asia, mainly in China, India and Japan.
Against the background of these externalities, the OPEC+ energy ministers face a daunting task of whether to prolong the current oil cuts of 7.7 mbd into 2021 or stick to the initial plan of easing the cuts to 5.8 mbd starting from 1 January.
Sources told Sputnik that this weekend, the OPEC+ ministers have held informal talks in order to discuss the size of the oil cuts. The final decision, however, is expected to be made at a ministerial meeting on Tuesday.
At the same time, the OPEC+ alliance is reportedly facing some internal disagreements. Iraq, a historic underperformer with the oil cuts, has almost reached its limit of accepting the OPEC’s “one size fits all” model of oil cuts, according to Deputy Prime Minister Ali Allawi, who has called on the oil producers’ alliance to take into account the member countries’ economic and social conditions. Despite this, Baghdad has not requested an exemption from the productions cuts as it wants to keep the oil prices afloat, the media reports indicated citing Iraqi Oil Minister Ihsan Ismaael.
Meanwhile the UAE, a close ally of Saudi Arabia, is reportedly mulling a withdrawal from OPEC as it has been tired of “unfair” allocation of production caps. However, Emirati Energy Minister Suhail Al-Mazrouei has reaffirmed the country’s commitment to OPEC in response to the reports.