JAKARTA (TheInsiderStories) - The Organization of the Petroleum Exporting Countries (OPEC) cut its oil demand to 5.9 million barrels per day (bpd) in 2021 or dropped by 350,000 bpd from a prior forecast. The decision based on “uncertainty surrounding the impact of COVID-19 and the labor market” on the outlook for transportation fuel in developed economies during the first half of next year.
The oil cartel pegged the 2020 oil demand at 89.99 million bpd, a decline of 9.77 million bpd from 2019. The organization In Dec. 4 meeting, the 13 members OPEC and 10 allies agreed to adjust production by 500,000 bpd starting January after 10 days of tense discussions. This will bring the total production cuts at the start of 2021 to 7.2 million barrels per day.
“Beginning in January 2021, DoC (Declaration of Cooperation) participating countries decided to voluntary adjust production by 500,000 bpd from 7.7 million bpd to 7.2 million bpd,” wrote the statement released on Dec. 3.
Another positive thing for the cartel was Iran’ agreed to go with any deal struck by the group. The meeting itself, reaffirmed the organization commitment to stabilizes the market and a fair return on invested capital. The meeting also recalled the decision taken by all participating countries in the DoC at the 10th (extraordinary) meeting on April 12, 2020.
The DoC participating counties also agreed to hold monthly OPEC and non-OPEC ministerial meetings starting January 2021 to assess market conditions and decide on further production adjustments for the following month. OPEC+ participating countries urged Saudi Arabia’ minister of energy, Prince Abdul Aziz bin Salman to continue in his role as Chair of the organization and he was accepted the job.
“His perseverance, diligence and extraordinary efforts have been highly appreciated by all participating countries and instrumental in helping counter the impacts of the COVID-19 pandemic and in stabilizing the oil market through the successful implementation of DoC objectives,” adds by the statement.
Looking ahead, the committee emphasized that it was vital that DoC participants, and all major producers, remain fully committed to efforts aimed at balancing and stabilizing the market. It noted that renewed lockdowns, due to more stringent the virus containment measures, continue to impact the global economy and oil demand recovery, with prevailing uncertainties over the winter months.
On Monday, New York-traded West Texas Intermediate and London-traded Brent settled up 21 cents to US$46.78 and $50.18, respectively. Oil bulls also pushed the market up earlier in the day on reports of a fuel transport ship being struck at a Saudi Arabia’ port, although the incident itself had no impact on fuel shipments.
Written by Editorial Staff, Email: theinsiderstories@gmail.com
