Dubai/London — OPEC and its allies discussed weaker compliance with pledged oil output cuts on Monday and weighed further action to support the market as the second wave of coronavirus hits demand.
The Organization of Petroleum Exporting Countries, Russia and others, known as OPEC+, were due to raise output by 2 million barrels per day (bpd) in January as part of a steady easing of record supply cuts implemented earlier this year.
But, with demand for fuel weakening, OPEC+ has been considering delaying that increase or even making further cuts.
An option gaining support among OPEC+ is keeping the existing supply curbs of 7.7 million bpd for another three to six months, OPEC+ sources said, rather than tapering the cut to 5.7 million bpd in January as currently called for.
“Discussion on this is possible,” said an OPEC source, citing “weaker demand and rising Libyan output.”
Two OPEC+ committees are meeting virtually this week. The Joint Technical Committee (JTC) started its meeting on Monday at 1000 GMT and the Joint Ministerial Monitoring Committee, which can recommend policy steps to OPEC+, meets on Tuesday.
Algeria, currently holder of OPEC’s rotating presidency, has backed an extension of existing cuts and top exporter Saudi Arabia has said the OPEC+ deal could be “tweaked.”
Other options include going ahead with the increase in output or cutting supply further.
Monday’s JTC meeting also discussed figures showing OPEC+ compliance with pledged curbs in October was 96%, which was less than previously thought, once compensatory cuts for past excess production by some countries were included, an OPEC+ source said.
The figures suggested little month-on-month progress in ensuring countries that overproduced in previous months made extra cuts now. Russia’s cumulative overproduction was seen at 531,000 bpd and Iraq’s at 610,000 bpd, the source said.
Oil nonetheless was trading above $45 a barrel, finding support from hopes of a COVID-19 vaccine and for further action by OPEC+. [O/R]
The full OPEC+ meets on Nov. 30 and Dec. 1 to decide policy.
(Reporting by Alex Lawler, Ahmad Ghaddar, Lamine Chikhi, Olesya Astakhova, Rania El Gamal, editing by Louise Heavens)