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‘Well done OPEC+ for the positive accord’
A simple accord was reached on Thursday by the petroleum group OPEC+. Both consumers and producers welcomed this accord particularly the consuming government, as it eased pressures on the oil prices and domestic consumers. Last Thursday’s agreement was on par with OPEC-Plus’ line of thinking, after all the facts were presented to them. This is particularly in consideration of the new COVID-19 variant, which could impact demand, impose travel restrictions, and bring back the culture of “work from home”.
This could cause a repeat of last year’s misery, which resulted in the oil price falling to less than $10 a barrel oil, while the demand for oil was down and static. In the meantime, OPEC and its Russian partner, during their closed meeting, reviewed all aspects of the oil market and concluded by agreeing on the best option viable without hurting their relationship with their consumers and customers. It resulted in welcomed statements and appraisals from world governments and leaders, affirming that OPEC+ is the most reliable, trustworthy, and responsible. The oil organization decided to continue with the established plan, which ensures that the group can manage the oil market and is the best knowledgeable oil group.
From January, it will pump additional 400,000 barrels per day, and will monitor and observe oil prices as well as ensure availability of adequate supply and reasonable price level. The market thus reacted accordingly in the beginning, as oil dropped below $ 70 and then recovered the next day back to $72 level, which sounded reasonable. It may stay at this level while the world is dealing with the new COVID-19 variant and while there is no end to the COVID- 19 such that people have to live with it in their daily lives and adapt accordingly. Meanwhile, there are some members who can no longer meet their quota production obligation in terms of the total volume of oil that can be put back to the market, which may be not more than 250,000 barrels.
This may be enough to meet current market demand, and balance the supply, without creating the situation of surplus in the oil market situation. It may not necessitate the use of USA’s strategic reserve for helping the current US administration and other consuming countries. Well done OPEC+ for the positive accord. By approving your decisions’ mechanism, meeting your commitments, and adopting wise decisions, OPEC is no longer alone… it is with “Plus”.
By Kamel Al-Harami Independent Oil Analyst