Russia, OPEC Plan to Discuss Need to Increase Oil Production in February

Ministers of the OPEC+ countries will hold two meetings on Monday, where they will decide whether to continue recovery of oil production in February by another 0.5 mln bpd, TASS reported. The emergence of a new strain of coronavirus is exacerbating an already fragile situation in the oil market, OPEC said. According to TASS sources, not all members of the alliance unequivocally support increasing production in February, believing that it is necessary to wait at least a month to assess the changed situation.

The previous OPEC+ ministerial meeting took place just a month ago – on December 3. Then they agreed to increase oil production starting from January, not at once by 2 mln bpd, as previously planned, but gradually. The new plan provides for a smooth increase in oil supply by no more than 0.5 mln bpd per month. Moreover, each subsequent increase in production must be approved at a separate meeting. On Monday, ministers will discuss the feasibility of such move in February.

Ministers of the OPEC+ Monitoring Committee, which includes eight out of 23 member countries, will be the first to gather via videoconference on Monday. The committee chaired by Russian Deputy Prime Minister Alexander Novak and Saudi Arabian Energy Minister Prince Abdulaziz bin Salman will assess the situation on the oil market based on the forecast prepared by the experts of the technical committee meeting the day before. As a result, ministers can make a recommendation to the alliance countries for further action. OPEC+ members in a large composition will consider it on the same day, at 17:00 Moscow time.

According to TASS sources, there is still no consensus in OPEC+ on the advisability of raising production by another 0.5 mln bpd in the coming month. Ministers are concerned about a new strain of coronavirus.

“In my opinion, now, because of the new strain, it is too early to talk about an increase in production. We must wait at least a month, and only then assess the situation,” representative of one of the delegations to OPEC told TASS.

According to OPEC Secretary General Mohammed Barkindo, whose words were published on the organization’s website on Sunday, the more dangerous coronavirus mutation and its rapid spread are a reminder of the fragile current global situation. And although OPEC still expects oil demand to grow by 5.9 mln bpd in 2021, it is not yet clear how the social and work habits acquired during the long quarantine will affect people’s mobility, Barkindo concluded.