OPEC and Russia are said to be approaching a compromise on oil supply policy for 2021 after they failed to make a decision in talks earlier this week on how to deal with weak oil demand amid the second coronavirus wave.
OPEC and its allies were expected to extend current oil cuts of 7.7 million barrels per day (bpd), or 8% of global supply, to at least March.
Hopes of rapid approval of vaccines against the virus prompted a surge in oil prices at the end of November. Then, some producers questioned why the need to restrain oil policy so tightly.
Some OPEC + sources, Russia, Iraq, Nigeria and the United Arab Emirates, stated that they are interested in supplying more oil to the market in 2021.
Meanwhile, according to sources, issues are heading towards a compromise. It is implied that there has been temporary progress in the discussions among OPEC + members and that the ministers are approaching a compromise. It is also spoken to reduce it to 0.5 million to 1.0 million barrels every month since January.
OPEC + must strike a delicate balance of oil prices to support their budgets. However, it is not high enough to allow US production increases. Otherwise, U.S. shale oil production, whose prices are now around $ 48, tends to rise above $ 50 a barrel.
In addition to the challenge within OPEC +, Moscow’s financing can tolerate lower oil prices than Riyadh’s.