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Tuesday, 01 December 2020

Worried about weak oil demand, OPEC+ weighs options for 2021

Saudi Arabia said no-one should doubt OPEC's commitment to propping up volatile markets, as it held talks with the world's other leading oil exporter Russia

Reuters , Monday 19 Oct 2020
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Saudi Arabia said on Monday no-one should doubt OPEC's commitment to propping up volatile markets, as it held talks with the world's other leading oil exporter Russia on Monday.

Already Russian President Vladimir Putin and Saudi Arabia's Crown Prince Mohammed bin Salman held two phone calls last week, Kremlin Dmitry Peskov spokesman said, adding regular contact was necessary as the COVID-19 pandemic has sapped oil demand.

On Monday, an OPEC+ ministerial monitoring committee (JMMC), including Saudi Arabia and Russia, held talks to discuss compliance with their oil output cuts. The panel may also debate options on whether to extend the existing curbs into 2021, OPEC+ sources said.

The Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, collectively known as OPEC+, have curbed output since January 2017 to try to support prices and reduce inventories.

"This group has shown, especially in this year, that it has the flexibility to adapt to changing circumstances when required. We will not dodge our responsibilities in this regard," Saudi Energy Minister Prince Abdulaziz bin Salman said.

"Nobody in the market should be in any doubt as to our commitment and our intent," Prince Abdulaziz told the opening of JMMC.

For now, the group is reducing production by 7.7 million barrels per day (bpd), down from cuts totalling 9.7 million bpd maintained from May 1 to Aug. 1. OPEC+ is due to reduce the cuts by a further 2 million bpd in January.

Several OPEC watchers, including analysts from U.S. investment bank J.P. Morgan, have said a weak demand outlook could prompt OPEC+ to delay any easing of the reductions. The United Arab Emirates and Russia, however, have said that cuts would be eased as planned.

Two OPEC+ sources speaking on condition of anonymity said Monday's panel meeting was unlikely to make a formal recommendation ahead of the next full OPEC meeting on Nov. 30-Dec. 1.

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