The non-member countries of the Organisation of Petroleum Exporting Countries (OPEC+) fully complied with the supply cuts in November that the group agreed on, two sources from the group said yesterday.
OPEC+ is scheduled to meet on January 4 to discuss how much the group will produce in February and beyond.
The group is also set to meet monthly to determine the production quotas for the following month, after weighing market conditions.
According to Reuters sources, OPEC’s compliance for November reached 104 per cent. Compliance for OPEC’s allies—a group that includes Russia—reached just 95per cent compliance. Combined, the overall compliance rate for November for OPEC+ was therefore 101 per cent, almost exactly the same as the group’s compliance in October 2020.
The negotiations about how much oil to produce given the prospects for slackened oil demand have not been without difficulty. Russia has consistently been supportive of increasing oil production, while Saudi Arabia has been more cautious in its approach—or perhaps more aggressive with the production cut plans—as the oil-dependent nation remains the swing producer of the group. Tensions also arose between the UAE in the run-up to the previous meeting, and other OPEC members, too, have expressed a desire to ramp up production and end the painful quotas.
Russia has already voiced its opinion that it will support another 500,000 barrel per day increase for the group starting in February, after a similar boost for January. However, there are detractors in the group that fear reports of a new wave of coronavirus and the anticipated demand destruction will not allow such a production increase without inventories rising.
The vaccine rollout for Covid-19 has been slower than many had hoped, and it will likely be well into the second half of 2021 before oil demand rebounds with any significant strength.
The most the group will consider increasing production for at the upcoming meeting is 500,000 bpd—a much smaller figure than the 2 million BPD that was part of the original plan to back off tough production quotas starting in January 2021.