Mohammed Barkindo, Secretary-General of global oil producer’s alliance Organization of the Petroleum Exporting Countries (OPEC) has remarked that OPEC+, which includes the body and Russia will continue with output cuts to restore stability to oil markets in the wake of declining demand due to the pandemic.
Speaking at the virtual India Energy Forum by CERAWeek, the OPEC Official stated that “Earlier, when we met, we were hopeful, almost optimistic, that this second half of 2020 will begin to see a recovery, both in the global economy as well as demand for energy and oil.”
“Unfortunately, both the economic growth as well as the demand recovery remains anemic at the moment due largely to the spread of the virus. We are determined to stay the course in balancing markets,” Mr. Barkindo added.
However, the OPEC Official reiterated that the body does not expect a “relapse of massive contraction” in oil demand that was seen in the second quarter.
Historic Production Cuts
Earlier OPEC+ initiated a historic level of production cuts between May and July which reduced the generation up to 9.7 million barrels per day to reverse a record fall in demand due to the pandemic. The alliance is currently drawing back 7.7 million bpd from the market.
Libya returns to production
Global oil prices saw a drop as Libya returned to the market as the domestic security situation improved while the situation was further aggravated by rising coronavirus cases in the US and Europe raising doubts over future energy demands.
Libya an Opec+ member, has the largest crude reserves in Africa and is expected to increase its production over 1 million barrels per day in the next four weeks after the country reopened its oil ports.
Saudi Arabia’s energy minister Prince Abdulaziz bin Salman urged fellow OPEC+ members to remain vigilant even though the global markets have overcome the steepest declines in terms of demand.
“I guess the worst part is over,” Saudi Arabia’s Energy Minister said at the same forum. “We are very much vigilant. There is a big shift altogether in terms of where we are today and where we were in April and May,” the minister added.
“The discipline we put together as OPEC+ is very assuring to the market. I would attribute it to everybody who is part of OPEC+. This time we were different.”