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The OPEC+ alliance will ensure oil prices do not plunge steeply again when it meets to set policy at the end of November, OPEC’s secretary general said on Thursday, adding that demand has been recovering more slowly than expected.
“I want to assure you that the OPEC, non-OPEC partnership will continue to do what it knows best, by ensuring that we don’t relapse into this almost historic plunge that we saw,” Mohammad Barkindo said.
Barkindo was answering a question at the Energy Intelligence Forum on whether there was room for a planned increase in oil output from January by OPEC+, a grouping that includes OPEC states, Russia and other allies.
“We have to be realistic that this recovery is not picking up pace at the rate that we expected earlier in the year,” he said. “Demand itself is still looking anaemic.”
A technical OPEC+ committee meeting is taking place on Thursday to discuss compliance with oil cuts and market fundamentals.
The group had 102 percent compliance with its cuts in September, two OPEC+ sources told Reuters.
Countries such as Iraq, Nigeria and the UAE, which had fallen short of their commitments, have been asked to make additional cuts until the end of the year to compensate for the shortfalls.
Barkindo said the compensation scheme was working well.
OPEC+ is due to taper production cuts by 2 million barrels per day (bpd), from 7.7 million bpd currently, in January.
Barkindo said when OPEC+ holds its ministerial meetings on Nov. 30 and Dec. 1 it will take stock of the whole year to inform any decision to stay the course or amend its policy.
On Tuesday, the energy minister from the United Arab Emirates told the same event that OPEC+ will stick to their plans to taper oil production cuts from January.
It comes as some European countries are reviving curfews and lockdowns to try to contain the rise in new coronavirus cases, with Britain expected to impose tougher COVID-19 restrictions on London from midnight on Friday.
A third of France’s population has been placed under nightly curfew to tackle climbing infections.
India, the world’s third biggest oil consumer, is on track to overtake United States with the world’s most COVID-19 infections, and is bracing for a surge of cases in coming weeks as it heads into its main holiday season.
“If demand weakens noticeably, OPEC+ will have no choice but to call off its production increase if it does not want to risk a renewed oversupply and another price slide,” Commerzbank said.
