The president of OPEC says energy demand was still fragile with the coronavirus raging across parts of the world, hence, oil producers’ cartel shouldn’t rush to increase output early next year
Algeria’s Energy Minister Abdelmajid Attar, who holds OPEC’s rotating presidency, said there was no guarantee the group and its allies would raise crude production by 2 million barrels a day by April, even after an agreement earlier this month to reach that level in steps.
Brent crude has soared more than 33% since the start of November to around $50 a barrel as governments announced the roll-out of vaccines. Yet it’s still down 24% this year. And with cases surging in the U.S. and parts of Europe tightening lockdowns, OPEC on Monday cut its forecast for global fuel consumption in the first quarter of 2021 by 1 million barrels a day.
“Despite the positive signs and a significant improvement in oil prices, I think we should be very cautious,” Attar said in an interview. “In the best-case scenario, we will be able to reach 2 million barrels daily as early as April. But this is not a goal in itself. What is important is to ensure that the global oil inventory surplus continues to erode and that we are on the path to lasting market stabilization.”
OPEC+, an alliance between the Organization of Petroleum Exporting Countries and others such as Russia, decided to add 500,000 barrels a day to crude markets starting in January and then hold monthly meetings on subsequent moves. That was less than the increase of 2 million barrels the group had agreed to in April. Back then, at the height of the pandemic, it slashed output by around 10 million barrels daily to prop up prices.