Adedapo Adesanya
By Adedapo Adesanya
Saudi Arabia has shouldered the responsibility of curbing one million barrels per day of crude supply in February and March as the Organisation of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) agreed to increase crude oil production by 500,000 barrels per day in January.
In a move that signifies the kingdom as a leader of the cartel, the large cut in crude production will help to sustain the market which has been plagued by weak demand and the coronavirus pandemic.
“We are the guardian of this industry,” Saudi Energy Minister, Prince Abdulaziz bin Salman, said as he announced the cut on Tuesday.
“This gesture of goodwill made by our leadership, in the name of His Royal Highness the Crown Prince Mohammad bin Salman.”
Its co-chair, Russia, had been pushing for a supply hike of about 500,000 barrels a day for February but the Eastern European giant and Kazakhstan were permitted to add a combined 75,000 barrels a day of supply in each of those months.
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 barrels per day 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 barrels per day for January, from 7.7 million barrels per day before.
The meeting reiterated the need to continue to closely monitor the market fundamentals, including supply from other parties not in the agreement and its impact on the global oil balance and overall market stability.
It further noted that high conformity levels had contributed significantly to market rebalancing and stability.
The meeting requested all underperforming participating countries to submit their plans for implementation of the required compensation for the overproduced volumes to the OPEC Secretariat by January 15, 2021.
It further decided to hold the next Joint Ministerial Monitoring Committee (JMMC) meeting on February 3, 2021, followed by a JMMC Meeting on March 3, 2021, and OPEC and non-OPEC Ministerial Meeting (ONOMM) on March 4, 2021.
