The Organisation of Petroleum Exporting Countries (OPEC), led by Nigeria’s Sanusi Barkindo and its allies known as OPEC+, yesterday agreed to adhere strictly to their existing policy of gradual oil output increases in the coming months.
However, the oil producers’ group revised its 2022 demand outlook upwards, even as it stated that it was sticking with its decision in July to phase out record output cuts by adding 400,000 barrels per day (bpd) of oil a month, continuing in October.
The oil cartel expects demand to grow by 5.95 million bpd after a record drop of about nine million bpd in 2020 due to the COVID-19 pandemic. But demand only rose by about three million bpd in the first half of 2021.
A release after the 20th OPEC and non-OPEC Ministerial Meeting (ONOMM), held via videoconference, noted that while the effects of the pandemic continue to cast some uncertainty, market fundamentals have strengthened.
The meeting welcomed the positive performance of participating countries in the Declaration of Cooperation (DoC), noting that overall conformity to the production adjustments was 110 per cent in July, reinforcing the trend of high conformity by the countries.
“In view of current oil market fundamentals and the consensus on its outlook, the meeting resolved to reaffirm: The decision of the 10th OPEC and non-OPEC ministerial meeting on 12 April 2020 and further endorsed in subsequent meetings, including the 19th ONOMM on 18 July 2021.
“Reconfirm the production adjustment plan and the monthly production adjustment mechanism approved at the 19th ONOMM and the decision to adjust upward the monthly overall production by 0.4 mb/d for the month of October 2021.
“Extend the compensation period until the end of December 2021 as requested by some underperforming countries and request that underperforming countries submit their compensation plans by 17 September 2021,” the organisation stated.
OPEC reiterated the critical importance of adhering to full conformity and to the compensation mechanism, taking advantage of the extension of the compensation period until the end of December 2021 and fixed the next meeting for 4 October, 2021.
Earlier, Barkindo had said that as a result of the wisdom of OPEC decisions, the market rebalancing process had continued, while the market outlook appeared generally robust.
He had disclosed that the OPEC secretariat’s global economic growth forecast for 2021 had been revised up slightly to stand at 5.6 per cent, while growth in 2022 had also been revised up and is now expected at 4.2 per cent.
He added that world oil demand growth expectations remained at six mb/d for 2021 with robust prospects for 2022, with revised growth to 4.2 mb/d, while total world oil demand was projected to exceed the 100 mb/d threshold in the second half of 2022 and reach 100.8 mb/d on average for the whole of the year.