Image credits: Smriti Rai, Pixahive
News Article

OPEC+ Agreement Lifts Oil Prices

By Peter Appleby | Fri, 12/04/2020 - 16:41

Oil prices rose following the agreement made between OPEC+ nations on Thursday to ease production cuts in January of next year.

European mix Brent hit its highest level since March on the back of the deal, reaching US$49.92 per barrel on Thursday before dropping to US$49.24 per barrel on Friday at 13:06 CST. West Texas Intermediate rose to US$46.20 per barrel on Friday, while Mexico’s crude basket is also climbing.

The agreement means OPEC+ nations will introduce an extra 500Mb/d into the global market beginning in January, with OPEC’s official press release saying that: “Beginning in January 2021, DoC participating countries decided to voluntary adjust production by 500MMb/d from 7.7MMb/d to 7.2MMb/d.”

From January onwards, OPEC+ countries will meet once a month to review the conditions of the market and reconsider production adjustments, said the statement.

Yesterday’s meeting should have taken place on Tuesday but key OPEC members, Saudi Arabia and UAE, were unable to see eye to eye on a preliminary agreement. Oil prices had dropped as a result and, according to Saudi24News, Saudi Arabia was considering resigning from its position as chairman of the OPEC+ group.

Despite the agreement, there is no guarantee that fractures in the group will begin to heal. According to various sources, UAE had been difficult to pin down and is has been irritated by the cuts that have placed its dramatic oil production increases on hold.

Mexico’s Minister of Energy Rocío Nahle took to Twitter to celebrate the meeting’s success. She remarked that Mexico was the only country to be represented by a female and tweeted a video of President Andrés Manuel López Obrador, in which he said that Mexico had no problem with fellow OPEC+ nations.

The meeting also highlighted the good performance that nation members had in catching up on their previous underperformance on implementing cuts. UAE, Iraq and Nigeria have all been criticized for failing to comply with output reductions.

“Meeting welcomed the positive performance in overall conformity levels to the production adjustments since it last met in June, and the constructive response from many countries to the compensation mechanism in accommodating their underperformed volumes as agreed at the June ministerial meetings, and later amended in September 2020,” the OPEC statement said.

Photo by:   Smriti Rai, Pixahive
Peter Appleby Peter Appleby Journalist and Industry Analyst