Members of the Organization of the Petroleum Exporting Countries (OPEC) and their allies agreed on Saturday to extend the historic reduction in production to which they have been operating since May 1 in July, while demand for oil continues to suffer. Covid-19.
"All the participating countries have accepted the possibility of extending the first phase of production adjustments in May and June by an additional month," the organization said in a statement after two rounds of videoconference negotiations.
According to the Algerian Minister of Energy Mohamed Arkab, quoted by the APS agency, the aim of the agreement is "to establish and ensure stability in the oil market between supply and demand".
Faced with the brutal fall of the latter and crude oil prices, the members of the cartel and their partners committed on April 12 to a historic reduction in their production of 9.7 million barrels per day (mbd) for the months from May and June, which was to increase to 7.7 mbd from July 1 to December, then to 5.8 mbd from January 2021 to April 2022.
Questioned by AFP, Mr. Arkab nevertheless evokes the figure of 9.6 mbd for the month of July, or 100,000 barrels per day less than for May and June, information which is not included in the OPEC press release .
Raising the level of crude oil supply "is a formidable and delicate balancing act, said Ann-Louise Hittle, Wood Mackenzie analyst." It is essential to find the right time, "he said. she added, which has not yet come.
The US Secretary of Energy Dan Brouillette sent his "congratulations" to OPEC + on twitter shortly after the announcement of the agreement.
- Respect the quotas -
The cartel and its partners have thus overcome the dissensions to which they have accustomed the market and have overcome the quarrels which focused this week on the non-compliance by certain countries with their quotas.
According to calculations by data provider Kpler, the group reduced production only by around 8.6 mbdd in May, 11% less than the volume forecast.
The agreement found on Saturday stipulates that the countries which did not respect their commitments in May and June, including Iraq and Nigeria, often singled out, will not only have to comply with them but also limit their production between July and September.
"We have a very good atmosphere between Opep and non-Opep countries. We are working in perfect harmony on major issues", assured Mr. Arkab earlier today, who also holds the rotating presidency of the cartel.
But negotiations are often tense between Russia and Saudi Arabia, the two heavyweights of OPEC +, which even started a short but intense price war after the failure of previous negotiations in March.
- 'Backbone' -
Despite the doubts hanging over the difficult agreement between producers, OPEC policy has shown its effectiveness since prices rose in early June around 40 dollars per barrel for the American benchmark, the West Texas Intermediate (WTI), and its European equivalent, Brent from the North Sea.
They had reached historic lows around April 20, hitting the 15 dollar mark for Brent and even going negative for WTI.
"The market could not have asked for a better outcome from the price collapse," said Bjornar Tonhaugen, analyst at Rystad Energy, after the announcement of the deal.
"Unless a second wave of Covid-19 hits the world, today's deal will be the backbone of a rapid recovery in the energy industry," he added.
OPEC + ministers also agreed to meet on December 1 in Vienna, Austria, where the organization's headquarters are located.
© 2020 AFP