OPEC and its non-OPEC allies, an energy group sometimes related to OPEC+, will meet via videoconference to strike a consensus over how to maintain supply to the market.
The group last year admitted to reducing the quantity of oil it produces to prop up oil prices as severe public health measures matched with an original fuel demand shock.
This week’s supply arrangement occurs when oil prices have jumped to pre-coronavirus levels. Production in the U.S. has received a hit from icing storms, and the COVID-19 epidemic extends to cloud the outlook.
OPEC’s de facto leader Saudi Arabia has openly supported allied associates to endure “extremely cautious” on production policy, urging the group versus complacency as it tries to navigate the ongoing coronavirus crisis.
Non-OPEC leader Russia, meantime, has designated it wants to drive ahead with a supply boost.
Analysts broadly assume OPEC+ to increase output from current levels, but problems prevail over how much precisely and which countries will be affected.
At an industry event last month, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman reportedly addressed those trying to predict the energy alliance’s subsequent move: Don’t try to predict the unpredictable.
Both Saudi and Russia will get receive what they require.
Tamas Varga, an analyst at PVM Oil Associates, said CNBC via telephone that he concluded OPEC and non-OPEC allies had done an “amazing job” in rebalancing the market.
Nevertheless, while the global oil demand is increasing, he cautioned that the recovery is yet “very, very fragile.”
What implies here is Russia and Saudi Arabia. The breakeven price for Russia’s budget is much more economical than that of Saudi Arabia, so that you will notice a kind of gap in the views within these two countries, Varga said.
OPEC+ was initially granted to cut oil production by a record of 9.7 million barrels per day last year, before releasing cuts to 7.7 million and 7.2 million from January. OPEC kingpin Saudi Arabia has since taken on deliberate cuts of 1 million from February through March.