The OPEC+ talks stalled on Monday after the group failed to reach a consensus on the best path forward for oil production, the body reported on Monday afternoon.
OPEC and non-OPEC’s Ministerial Meeting held on Monday will now resume on Tuesday, January 5, giving the group more time to discuss amongst themselves and come to some sort of agreement on February’s oil production.
The group has been unable to—so far—reach an agreement, with some countries lobbying hard for a 500,000 barrel per day output increase and others hoping to stay the course given the still-slackened demand and little signs of an uptick as lockdowns and a new extra-virulent Covid-19 strain begins to spread in more countries. The two heavyweights in the group, Russia and Saudi Arabia, are once again at the opposite end of the spectrum, with Saudi Arabia pressuring the group to rollback the additional production rolled out in January of 500,000 bpd, and Russia hoping for a substantial increase of 500,000 bpd. The chasm between them now 1 million bpd. Saudi Arabia did say, however, that it would accept staying the course in February.
Backing Saudi Arabia’s stance are Oman, Iraq, Algeria, Nigeria, and Kuwait. Backing Russia’s stance is Kazakhstan.
These two members hold the most sway in the group, with Saudi Arabia being the swing producer. And it is these two members who also tanked oil prices back in March when they quarreled over this same issue. That quarrel involved both countries ramping up oil production to the point of further saturating an already saturated oil market right before months and months of lockdowns that stripped away more demand for crude.
Prior to the Tuesday meeting, groups will hold bilateral talks and will be able to consult with their own governments, delegates have said, according to Reuters.
The market should brace for more volatility this year courtesy of OPEC, with meetings scheduled to be held monthly.
By Julianne Geiger for Oilprice.com