The Secretary-General of the Organisation of the Petroleum Exporting Countries has said OPEC and its allies need to remain disciplined with their production to ensure full oil price recovery as the global economy continues to rebound from the COVID-19 pandemic.
“We must emphasise in strong terms: cautious optimism, cautious optimism, cautious optimism,” Barkindo said at a delegate-level OPEC+ technical committee meeting on Tuesday, two days ahead of when ministers will convene online to decide on production levels for April and perhaps beyond.
According to S&P Global Platts, several members are expected to push for a loosening of quotas.
Under the current agreement, OPEC and nine allies are cutting a collective 7.2 million barrels per day of production, which can be eased by up to 500,000 bpd each month.
Barkindo said OPEC’s analysts projected that global oil demand would grow by 5.8 million bpd in 2021 to reach 96 million bpd, compared to a pre-pandemic market of around 100 million bpd.
“The encouraging global economic developments and resilient demand in Asia are upside factors,” he said.
He added that global COVID-19 infections rose in the last week of February, indicating that the pandemic still posed downside risks to the economy.
Barkindo said the distribution of vaccines, which favoured the world’s richer nations, would also lead to an uneven recovery.
He said, “Progress on COVID-19 vaccinations continues in many countries, but the current pace shows that many developing countries risk being left behind.
“We hold out hope that the multilateral and multiparty efforts will support inclusive and speedy worldwide access to inoculations.”
The OPEC+ Joint Technical Committee, which met on Tuesday, is tasked with reviewing market conditions and assessing member quota compliance.
The JMMC, in turn, advises the full OPEC+ conference, which will meet on March 4.
The international oil benchmark, Brent crude, rose by $0.25 to $63.94 per barrel as of 7pm Nigerian time on Tuesday. It hit a record high of $67.14 per barrel last Wednesday.
The OPEC President, Diamantino Azevedo, said on Tuesday that the global oil market was rebalancing after damage to demand wrought by the pandemic was met with curbs on output by producers from the group.
“Crude prices are relatively stable … we see a certain balance between demand and supply,” Azevedo was quoted by Reuters as saying in an interview.
“However, due to the pandemic situation the world is living through and with new waves arriving; we could have a situation of smaller demand due to confinements. Vaccination of the global population against COVID-19 will certainly increase demand,” he added.
Azevedo, Angola’s Minister of Mineral Resources and Petroleum, warned that any worsening of the pandemic could lead producers to tamp down output.
“The production levels that were desirable at the time of the latest adjustment could naturally be affected downward due to … the COVID-19 pandemic and its variants,” he added.