First OPEC+ ministerial meeting of 2021 held today

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Energy Minister Prince Abdulaziz Bin Salman, chairman of the OPEC and non-OPEC Ministerial Meeting; called for a continuation of collaborative efforts that absorbed the shocks of 2020; at the 13th OPEC and non-OPEC Ministerial Meeting on Monday.

After discussions failed to arrive at a decision, they adjourned the 13th OPEC+ meeting to today (Tuesday, Jan. 5). The meeting will resume at 15:30 (Vienna time) tomorrow.

Prince Abdulaziz, in his opening remarks in the Monday meet via videoconference, stated; “Our collaborative approach helped us go a long way towards rebalancing global oil markets after the shocks of last year.

“But now, as we see light at the end of the tunnel; we must – at all costs – avoid the temptation to slacken off our resolve.”

Rystad Energy’s Oil Markets Analyst Louise Dickson said: “OPEC+ deliberations are still ongoing and will continue through the following day, but as usual with meetings where serious decisions have to be taken; two opinions formed, the Saudi-led proposal for a cautious approach to maintain oil prices and the Russia-led clarion call for a swifter return of supply to the market.

“Russia’s warning that OPEC+ may lose market share if they fail to increase this very moment is probably a bit over-stated. In a year with supply fluctuations in the millions of barrels and bruised upstream potential — a month of more restrained output from OPEC+ will not tip the balance so far that the cartel is unable to claw back barrels from shale in a month’s time,” she said.

A rollover would certainly incentivize increased drilling in the US shale patch; but this is nothing that OPEC+ cannot correct at next month’s meeting, she added.

OPEC+ first ministerial meeting of 2021

Prince Abdulaziz, who welcomed all to the first OPEC+ ministerial meeting of 2021, recognized the work of the co-chair, Alexander Novak, deputy prime minister of the Russian Federation; “whose continued dedication and leadership have, once more, been vital in helping us progress towards our goals.”

“Allow me to welcome Mohammed Abdullatif Al-Fares, the energy minister of Kuwait, and give thanks for the work of his predecessor, Khaled Al-Fadhel. I also want to welcome the Diamantino Pedro Azevedo, minister of mineral resources, petroleum and gas of Angola, as he assumes the OPEC presidency. Our thanks are due to Abdelmadjid Attar for his sterling work and leadership during his time as president,” Prince Abdulaziz said.

Prince Abdulaziz lauded the group’s efforts in overcoming the year’s challenges with their unity and conformity. “Not only did we achieve the biggest ever cuts to oil supply, but we also saw those cuts through; in a disciplined and united manner, that said a lot about the effectiveness of our joint efforts.

Highest levels of conformity

“We achieved the highest levels of conformity in the four years OPEC+ has been operating. For the first time we agreed a mechanism for compensation to make up for any past slippage from our goals. Let’s hope we can continue to build on the past year’s momentum, and succeed in achieving full compensation.”

Citing the need to make every effort to achieve both full compliance and full compensation, Prince Abdulaziz said; “There is no room for complacency. The markets have rewarded our determined efforts of the past year; but now is not the time to rest on our laurels.”

“The outlook for the first half of 2021 is very mixed;” OPEC Secretary-General Mohammad Barkindo said on Sunday, ahead of the OPEC+ meeting. “There are still many downside risks to juggle,” he said.

In December, the extended cartel agreed to Russia’s proposal to start adding 500,000 bpd to their daily total from January based on the improved demand outlook and some members’ unwillingness to continue cutting deep. This is the key point under discussion in the meeting.

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