After several weeks of intense negotiations, OPEC+ ministers were finally able to reach a consensus on how much to reduce oil production from January 2021. At a meeting on December 3, the choice was made in favor of the scenario originally proposed by Russia: oil exporters will be able to increase production gradually, at 0.5 million b/d per month, from the New Year.
Long road
Winter consultations of oil-producing countries in OPEC + were characterized by an abundance of opposite views. Even in March, when the meeting in Vienna failed to agree, there were only two competing views on how to build a production policy for the coming months. This time the tone of the negotiations was still set by Russia and Saudi Arabia, the largest oil producers in the alliance. But the United Arab Emirates also offered an unexpectedly different position.
Thus, if it was believed in Riyadh that the current level of 7.7 million b/d restrictions should be extended by at least a quarter, i.e. until the end of March 2021, the position of the UAE was to leave in force the original plan, according to which the reduction of oil production from January would be reduced to 5.8 million b/d. Meanwhile, a compromise option proposed by Russia. According to it, the restoration of production from January should begin, but still, have to be smooth.
Negotiations could not move from the deadlock within a few weeks, so the formal meeting was even postponed from 1 to 3 December. Finally, it was only by the evening of December 2 that news agencies began reporting early signs of progress and that the discussions had returned to the diplomatic track. The news also appeared immediately after the meeting started. As it turned out, the only option for discussion is the one that implies an increase in production by 0.5 million b/s every month.
As reported by a TASS source participating in the negotiations, the ministers decided to meet every month to monitor the market situation and confirm the plan to increase oil production by another 0.5 million b/d.
At the final press conference after the meeting, Russian Deputy Prime Minister Alexander Novak confirmed that the agreements are of this nature, and pointed out that we are still talking about easing restrictions at 2 million b/d, but only on a monthly basis. The Union members will approve the volume of production recovery for each month, and meetings will begin in January.
Russia in this quota will be able to increase production in January by 125 thousand b/d, and oil workers are technically ready for this, Novak assured. "The companies have confirmed their readiness to increase [production] in case of adoption of such consolidated decision by all countries," he said.
Last game of thrones
The debate in OPEC+ was particularly tense, with reports that Saudi Arabia had asked to step down from its chairmanship and suggested that the UAE should try it on. At the OPEC ministerial conference on November 30, the Saudi Energy Minister, Prince Abdulaziz bin Salman, did not take the floor, contrary to usual practice, and the OPEC+ ministerial conference on December 3 began immediately in a closed session without the traditional recourse to the press and analysts. According to TASS sources, Alexander Novak conducted the whole conference himself as the sole co-chairman.
However, already during the press conference, it became clear that after the decision was made, the atmosphere among the allies again defused. At the end of the meeting, the OPEC Secretariat immediately informed the public that Bin Salman's colleagues in OPEC+ had asked him to take back the role of Co-Chair and his Highness had agreed to that.
While communicating with the press, Novak and Bin Salman called each other friends, and the Prince invited the Russian Deputy Prime Minister "to a barbecue" in Saudi Arabia. According to him, the visit may take place already on December 19 this year.
In conclusion, the Saudi Minister urged journalists not to inflate the scale of disagreements between partners. "There are no "star wars" in OPEC. They are over. And so did the "games of thrones". The last such battle ended today," he summed up.
GSV "Russia - Islamic World"
Photo: Creative Commons