OPEC+ Talks Continue with Various Proposals

Saudi Arabia is reportedly proposing more output cuts during the month of February during the OPEC+ summit, Reuters reported.

The Kingdom believes maintaining production curbs is essential to restoring the global oil market balance, despite an improved outlook due to the rollout of Coronavirus vaccines.

This comes as worries about renewed lockdown and preventive measures are negatively affecting expectations for demand recovery.

On the other hand, Russia and Kazakhstan are reportedly asking for raising production by another 500,000 barrels per day (b/d) as was the case last month.

On the other hand, a number of other major producers believe it is best to maintain output at the current levels.

Saudi Arabia has reportedly warned leading producers against raising production on Monday, noting that the new Coronavirus variant is worrying and unpredictable, the Financial Times reported.

The Kingdom has openly supported maintaining output curbs to help restore market balance amid the pandemic.

According to Saudi officials, raising production imposes a risk on market recovery even if there could be small short-term gains.

Last month OPEC+ increased production by 500,000 barrels per day (b/d), an increase that was well below the expected 2 million b/d rise.

The outlook for the first half (H1) of 2021 is very mixed, according to the Secretary-General of OPEC, Mohammed Sanusi Barkindo, who was quoted by Bloomberg as saying that “there are still many downside risks to juggle.”

Two forces are moving the market, which puts pressure on the OPEC+ alliance. On one hand, the rollout of vaccines is helping improve the demand outlook, while the new variant and the rising number of cases amid a new wave that prompted renewed lockdown measures are making for a more gloomy outlook.