Most OPEC+ oil-producing countries oppose plans to increase output from February as winter lockdowns to contain the coronavirus choke demand, four OPEC+ sources told Reuters on Monday.
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OPEC+, which groups OPEC and other producers including Russia, began meeting at around 1500 GMT on Monday.
On Sunday, OPEC Secretary General Mohammad Barkindo warned OPEC+ experts of downside risks facing the oil market.
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On Monday, Saudi energy minister Prince Abdulaziz bin Salman said OPEC+ should be vigilant and cautious despite a generally optimistic market environment as demand for fuels remains fragile and the new variant of coronavirus is unpredictable.
“In many parts of the world, where infection rates have increased worryingly, a new wave of lockdowns and restrictions are being put in place, which will inevitably impact the rate of economic recovery in those countries,” he said.
The new variant of coronavirus, reported in Britain last month, is spreading globally and on Monday British Prime Minister Boris Johnson was scheduled to set out tougher lockdown rules.
With benchmark Brent oil futures holding above $50 per barrel, OPEC+ took the opportunity this month to raise output by 500,000 barrels per day (bpd) as it looks to eventually undo cuts that currently stand at 7.2 million bpd.
OPEC+ producers have been curbing output to support prices and reduce oversupply since January 2017, and cuts a record 9.7 million bpd in mid-2020 as COVID-19 hammered demand for gasoline and aviation fuel.
OPEC’s leader Saudi Arabia has repeatedly suggested a more cautious approach during previous meetings, while the United Arab Emirates and non-OPEC member Russia have said they prefer a speedier increase.
On Monday, Russian Deputy Prime Minister Alexander Novak said there were still loads of uncertainties in the oil market and OPEC+ should remain flexible in its decision-making.
Benchmark Brent prices rose above $53 per barrel on Monday, touching their highest levels since March 2020, on expectations that OPEC+ will hold output steady in February. They later fell.
“Under the current output terms, surpluses are expected from February until April, before demand recovers from May onwards, so a possible OPEC+ decision to not increase production will keep balances at a manageable level,” said Bjornar Tonhaugen from Rystad Energy.
- Saudi Arabia and Russia express unity ahead of OPEC+ summit
- Russia supports OPEC+ 500,000 bpd oil output hike from Feb, says Novak
- OPEC+ cuts deal for lower production hike from January
- Iraq will not ask for exemption from OPEC+ reduced output deal: Oil Minister
- Oil prices up on hopes for delay to OPEC+ supply increase, vaccine hopes