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OPEC commits to stable global oil market

OPEC commits to stable global oil market
OPEC and its oil allies reached agreement Sunday to cut global production by 9.7 million barrels a day starting May 1, to shore up the world price in the face of a significant drop in the demand for oil because of the coronavirus pandemic.

The Organisation of Petroleum Exporting Countries and non-OPEC ministerial meeting has reaffirmed its commitment to a stable global market in the mutual interest of producing countries.

The meeting gave the assurance at the end of its virtual 17th OPEC and non-OPEC ministerial meeting on Tuesday.

“In view of current oil market fundamentals and the consensus on its outlook, the meeting reaffirmed the existing commitment of the participating countries in the Declaration of Cooperation (DoC) to a stable market in the mutual interest of producing nations.

“Also, the efficient, economic and secure supply to consumers; and a fair return on invested capital.

“Reconfirmed the existing commitment of the 10th OPEC and non-OPEC ministerial meeting in April 2020, amended in June, September, and December 2020, as well as in January and April 2021 to gradually return two million barrels a day (mb/d) of the adjustments to the market, with the pace being determined according to market conditions,’’ it said.

Brent oil advanced above $70 a barrel after the OPEC+ alliance forecast a tightening global market ahead of its meeting.

The meeting reiterated the critical importance of adhering to full conformity and taking advantage of the extension of the compensation period until the end of September 2021, as requested by some underperforming countries.

It added that compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC ministerial meeting.

The meeting further reconfirmed the decision made at the 15th OPEC and non-OPEC ministerial meeting regarding production adjustments for July 2021, given the observed market fundamentals.

It also emphasised the need to continue to consult and closely monitor market fundamentals.

According to it, to maintain the monthly OPEC and non-OPEC ministerial meetings until the end of the decision made at the 10th OPEC and non-OPEC meeting on April 12, 2020.

It noted the ongoing strengthening of market fundamentals, with oil demand showing clear signs of improvement and OECD stocks falling as the economic recovery continued in most parts of the world as vaccination programmes accelerated.

The meeting welcomed the positive performance of participating countries in DoC overall conformity to the production adjustments.

The 18th OPEC and non-OPEC ministerial meeting will hold on July 1, 2021.

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