OPEC + talks halted Monday after the group failed to reach consensus on the best way forward for oil production, the body reported Monday afternoon.
The OPEC-non-OPEC ministerial meeting to be held on Monday will now resume on Tuesday, January 5, giving the group more time to discuss and reach some sort of agreement on oil production in February.
The group has so far failed to reach an agreement, with some countries lobbying hard for a production increase of 500,000 barrels per day and others hoping to stay on track given the still weak demand and small signs of a rebound like lockdowns and a new extra-virulent Covid-19 strain is beginning to spread in more countries. The two heavyweights in the group, Russia and Saudi Arabia, are once again at the other end of the spectrum, with Saudi Arabia pressuring the group to scale back the additional 500,000 bpd production rolled out in January, and Russia hopes at a substantial increase of 500,000 bpd. The gap between them is now 1 million bpd. However, Saudi Arabia said it would accept continuing the course in February.
Saudi Arabia’s position is supported by Oman, Iraq, Algeria, Nigeria and Kuwait. Kazakhstan supports Russia’s position.
These two members have the most influence in the group, with Saudi Arabia as the swing producer. And it is these two members who also tanked oil prices in March when they argued over the same issue. That feud involved both countries ramping up oil production to the point where an already saturated oil market became further saturated just before months and months of lockdowns that took away demand for crude oil.
Ahead of the Tuesday meeting, groups will hold bilateral talks and may consult with their own governments, delegates said, Reuters said.
The market should brace for more volatility this year thanks to OPEC, with monthly meetings.
By Julianne Geiger for Oilprice.com
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