OPEC+ said oil producing countries must be ready to act when the group gathers for its next full ministerial meeting in two weeks, the latest indication the cartel is preparing to delay a production increase.
A panel of OPEC+ ministers that monitors the market stopped short of giving a firm recommendation on whether to postpone an oil-output increase planned for January. Ministers had been discussing a delay of three to six months. A final decision will be made at a full ministerial meeting on Nov. 30- Dec. 1, delegates said.
“All participating countries need to be vigilant, proactive and be prepared to act, when necessary, to the requirements of the market,” the panel said in a draft statement.
Saudi Energy Minister Prince Abdulaziz bin Salman said he could see a light at the end of the tunnel thanks to the development of Covid-19 vaccines, but the market had some way to go before getting there. His counterparts from Algeria and Russia talked about bumps in the road and an uncertain winter, adding to the impression that the group is open to considering a delay.
“There has been very good news of possible vaccines against the Covid-19 virus, allowing us to see some glimmer of light at the end of the tunnel,” Prince Abdulaziz said at the opening session of an OPEC+ video conference on Tuesday. “But the good news was counterbalanced by a surge in cases in the second wave of infections.”
In addition to the medical breakthroughs, signs of a strong demand recovery in Asia are giving cause for optimism, said Prince Abdulaziz. Yet he also emphasized the negative impact of another round of lockdowns in Europe and the supply increase from Libya.
“The world has a better understanding of how to fight the pandemic, new restrictions have a milder effect on demand and we see a significant progress in development of vaccines,” said Russian Deputy Prime Minister Alexander Novak. “We need to continue showing commitment to our obligations, taking into account today’s uncertainties and the market situation amid winter demand.”
While crude prices rallied to $45 a barrel in London last week following news of a breakthrough on a Covid-19 vaccine, they remain far lower than most OPEC nations need to cover government spending. There’s also a risk that oil demand will remain depressed for many months during the slow rollout of vaccines.
“There is still a way to go before we reach the other side of the long-awaited pandemic tunnel,” Prince Abdulaziz said.