BAKU, Azerbaijan, Jan.25
By Leman Zeynalova – Trend:
The global oil supply is set to remain sluggish, Trend reports citing UK-based Capital Economics research and consulting company.
“Weak prevailing demand growth, limited export opportunities and voluntary production cuts by Saudi Arabia should keep OPEC production grounded, at least in the first half of the year. Elsewhere, ongoing funding constraints, environmental concerns and weak investment last year should mean that production in non-OPEC countries, such as the US, remains below pre-virus levels. That said, we do expect higher prevailing prices to lead to a gradual revival in US production.
Moreover, we expect OPEC+ compliance to start to slip over the course of this year on the back of higher prices and the vaccine-induced rebound in demand. And by 2022 we expect OPEC+ to have largely abandoned its production cuts, which is a key reason why we think that oil prices will fall slightly in that year,” said the company.
OPEC+ agreed to lift oil production by 75,000 barrels per day over January levels.
But Saudi Arabia’s late announcement after the meeting sent oil prices soaring—that Saudi Arabia would voluntarily cut an additional 1 million barrels per day in February and March above its current quota—all while OPEC’s allies get to ramp up production.
The OPEC+ agreed not only for the production levels for February but for March as well. March’s production level will see an additional increase of 120,000 barrels per day over February levels, or 195,000 bpd over January levels.
With March’s production quotas already set, the February meeting, therefore, will set production quotas for April. The previous meeting held in December adjusted the total production cuts to 7.2 million bpd for January, from 7.7 million bpd before.
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