OPEC To Cut 1.5m bpd Output By June 2020

OPEC
OPEC

The 178th (Extraordinary) Meeting of the Conference of the Organisation of the Petroleum Exporting Countries, OPEC, has ended in Vienna, Austria, with the recommendation of 1.5 million barrels per day, bpd output cut until June 2020.

The recommendation made to the 8th OPEC and non-OPEC Ministerial Meeting, which would be applied to pro-rata between OPEC (1.0 mb/d) and non-OPEC producing countries (0.5 mb/d) participating in the Declaration of Cooperation also seek to extend the adjustment levels agreed at the 177th Meeting of the Conference and the 7th OPEC and non-OPEC Ministerial Meeting for the remainder of the year.

In a statement sent to Vanguard, OPEC stated: “The 178th (Extraordinary) Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) was held in Vienna, Austria, on Thursday, 5 March 2020, under the Chairmanship of its President, HE Mohamed Arkab, Minister of Energy of Algeria and Head of its Delegation.

“The Conference took note of the announcement from Ecuador that it has withdrawn from its Membership of OPEC, with effect from 1 January 2020. The Conference recalled the First OPEC Summit held from 4-6 March 1975, exactly 45 years ago, in Algeria. The Summit saw the establishment of OPEC’s sister organization, the OPEC Fund for International Development. The Conference acknowledged Dr. Abdulhamid Alkhalifa, Director-General of OFID, and his able staff, for their great achievements in contributing to reducing poverty and improving the lives of millions of people around the globe.

“The Conference reviewed the report and recommendations of the Joint Ministerial Monitoring Committee (JMMC), whose work continues to be ably supported by the Joint Technical Committee (JTC) and the OPEC Secretariat. The Conference took note of oil market developments since it last met in Vienna on 6 December 2019 and reviewed the oil market outlook for the remainder of 2020. It noted the positive ramifications of the decision to further voluntarily adjust production at the 177th Meeting of the Conference, and subsequently the 7th OPEC and non-OPEC Ministerial Meeting, with market sentiment improving in the weeks thereafter.”

It added: “However, the COVID-19 outbreak has had a major adverse impact on global economic and oil demand forecasts in 2020, particularly for the first and second quarters. Global oil demand growth in 2020 is now forecast to be 0.48 mb/d, down from 1.1 mb/d in December 2019. Moreover, the unprecedented situation, and the ever-shifting market dynamics, means risks are skewed to the downside. The Conference noted that the further impact of the COVID-19 outbreak on oil market fundamentals necessitates further continuous monitoring.

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“Accordingly, in view of the current fundamentals and the consensus on market perspectives, the Conference decided to recommend to the 8th OPEC and non-OPEC Ministerial Meeting to extend the adjustment levels agreed at the 177th Meeting of the Conference and the 7th OPEC and non-OPEC Ministerial Meeting for the remainder of the year. It also agreed to recommend to the 8th OPEC and non-OPEC Ministerial Meeting a further adjustment of 1.5 mb/d until 30 June 2020 to be applied pro-rata between OPEC (1.0 mb/d) and non-OPEC producing countries (0.5 mb/d) participating in the Declaration of Cooperation.

“Member Countries reaffirmed their continued focus on fundamentals for a stable and balanced oil market, in the interests of producers, consumers, and the global economy. The Conference emphasized the ongoing dialogue with consuming countries, and the consultations undertaken in a collegial spirit before reaching decisions. Member Countries are resolute and committed to being dependable and reliable suppliers of crude and products to global markets. The Conference confirmed that its next Ordinary Meeting will convene in Vienna, Austria, on 9 June 2020, and noted that September 2020 will mark the 60 Year Anniversary since the founding of OPEC in Baghdad in 1960.”

Tackling Coronavirus

The organisation stated that it is currently working with China and other stakeholders, to tackle Coronavirus in order to find a lasting solution to oil market instability.

In his opening address to the 178th (Extraordinary) Meeting of the OPEC Conference, obtained by Vanguard, Algeria’s Minister of Energy and President of the OPEC Conference, HE Mohamed Arkab, said: “We are extremely grateful to the Government of China for their cooperation with us over the last few weeks and months.

“HE Wang Qun, Permanent Representative of the People’s Republic of China to the United Nations and other International Organizations in Vienna, provided a briefing at an extraordinary meeting of the Joint Technical Committee, which was held on the 4th of February. This is a clear indication of the warm relations that exist between China and our participating countries.”

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Declaration of cooperation

He said: “Forty-five years ago, OPEC Member Countries in their first Solemn Declaration stated that, ‘the interdependence of nations, manifested  in  the world  economic  situation,  requires  a  new  emphasis  on  international  co-operation and declare themselves prepared to contribute with their efforts to the objectives of world economic development and stability.’

“The timeless wisdom of these words has once more been vindicated as we meet to discuss the challenges of our own times. My country is proud of our Membership of OPEC, proud of the role we have played as a constructive partner over many decades and proud that Algeria hosted that first OPEC Summit.

“We assume the Presidency of the OPEC Conference at a critical juncture in the Organization’s history, but inspired by the giants of the past and the spirit of the First Solemn Declaration, with all of your help and support, I have no doubt, that this Organization’s best days are ahead of it.”

According to him, “Turning to the current market situation and our business for today, it is clear that the decisions are taken at the 177th Meeting of the OPEC Conference and the 7th OPEC and non-OPEC Ministerial Meeting of 5th and 6th December 2019, to further adjust production voluntarily, saw an improvement in market sentiment over the course of subsequent weeks.”

Oil price

However, the price of many crudes, including Nigeria’s Bonny Light, hovered at over $52.42 per barrel in the global market, thus showing $4.58 below the $57 per barrel reference price of the nation’s 2020 budget.