OPEC is studying the possibility of reducing oil production

 

On Monday, the work of a two-day ministerial summit for members of the Organization of Petroleum Exporting Countries (OPEC) began, with the aim of looking into their respective shares in reducing the production of black gold in the future, while the Covid-19 epidemic continues to cast a shadow on the global market.

 

The meetings have started, and will take place by default, as are other monthly meetings between ministers this year.

 

On Tuesday, the 13 cartel members will be joined by their ten partners in the framework of the "OPEC Plus" coalition, most notably Russia.

 

The Algerian Minister of Energy, Abdelmadjid Attar, who holds the rotating presidency of the cartel, warned in an opening speech carried directly on the OPEC website that the health crisis still has "unprecedented negative repercussions on the global economy and therefore on energy markets."

 

To stop the decline in oil prices, OPEC is resorting to its main weapon through a significant reduction in its production.

 

Protecting the market, which has been severely affected by the outbreak of the Covid-19 epidemic, is the common goal of producing countries, while prices are still gradually recovering after sliding to unprecedented levels in April.

 

In order to achieve this, the group committed to massive reductions in the production of oil in its countries to adapt it to the demand, which decreased greatly, a step that contributed to raising prices again, but had a significant impact on the revenues of producers.

 

According to the agreement in force in April, production cuts currently amount to 7.7 million barrels per day, and this number is supposed to be reduced to 5.8 million as of January 2021, but many observers expect a delay in reducing the cuts for at least three months, and perhaps six months, and that. Because the second wave of Covid-19 was not previously expected.

 

"We have to be aware today that market conditions in 2020 will likely continue in the first quarter of 2021," Attar said in his speech.

 

And earlier this month, members of the OPEC + group agreed that they must be prepared to take action on production cuts in order to prevent another drop in prices.

 

"All participating countries should exercise vigilance, be proactive, and be prepared to act, when necessary, in accordance with market requirements," said a joint statement issued after the group’s monthly meeting.

 

However, the recent price hike, which was reinforced by the announcement by AstraZeneca, Moderna and Pfizer-Biontech laboratories that an effective vaccine against the epidemic is approaching, adds to the ambiguity of the atmosphere that the previous summits have witnessed in recent times.

 

The first OPEC summit in 2020, held in Vienna, was unsuccessful. In early March, a price war took place between Saudi Arabia and Russia in Vienna within a month.

 

The impact of the major vaccination campaigns and their impact on the recovery of faltering economic activity will not be seen