Photo: OPEC

OPEC and allies extend oil production cuts into April

OPEC and allies on Thursday decided to extend oil production cuts into April 2021, while offering small exemptions to Russia and Kazakhstan to meet their domestic needs, in a push to accelerate the rebalancing of the oil market.

The 14th Meeting of OPEC and non-OPEC Ministers took place via video conference on Thursday 4 March 2021, under the Chairmanship of Prince Abdul Aziz bin Salman, Saudi Arabia’s Minister of Energy, and Co-Chair Alexander Novak, Deputy Prime Minister of the Russian Federation.

The meeting emphasized the ongoing positive contributions of the Declaration of Cooperation (DoC) in supporting a rebalancing of the global oil market in line with the historic decisions taken at the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting on 12 April 2020 to adjust downwards overall crude oil production and subsequent decisions.

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The ministers noted the significant voluntary extra supply reduction made by Saudi Arabia, which took effect on 1 February for two months, which supported the stability of the market.

Saudi Arabia said it would extend its voluntary adjustments of 1 million barrels per day (bpd) for the month of April 2021.

The ministers approved a continuation of the production levels of March for the month of April, with the exception of Russia and Kazakhstan, which will be allowed to increase production by 130 and 20 thousand barrels per day respectively, due to continued seasonal consumption patterns.

According to Reuters, the news pushed oil prices back towards their highest levels in more than a year with Brent trading up 5 per cent above $67 a barrel.

The meeting noted that, since the April 2020 meeting, OPEC and non-OPEC countries had withheld 2.3bn barrels of oil by end of January 2021, accelerating the oil market rebalancing.

It was also noted that Nigeria achieved full conformity in January 2021.

The ministers agreed to the request by several countries, which have not yet completed their compensation, for an extension of the compensation period until end of July 2021.

The meeting recognized the recent improvement in the market sentiment by the acceptance and the rollout of vaccine programs and additional stimulus packages in key economies, but cautioned all participating countries to remain vigilant and flexible given the uncertain market conditions, and to remain on the course which had been voluntarily decided and which had hitherto reaped rewards.

The next meetings of the JMMC and OPEC and non-OPEC Ministers are scheduled for 31 March and 1 April 2021, respectively.