OPEC+ Holds Emergency Meeting as COVID-19 Cases RiseBy Peter Appleby | Thu, 09/17/2020 - 16:45
OPEC+ is set to hold an emergency meeting amid depressed global oil prices and the uptick of COVID-19 cases worldwide. The online meeting will be focused on “reviewing an internal document which warned that a rise in coronavirus cases in some countries may curb oil demand despite signs of economic recovery and initial indications of a decline in oil stocks.”
The World Health Organization warned of a worrying global rise in new COVID-19 cases as India, one of the world’s major oil consumers, recorded almost 97,894 new cases in the last 24 hours. The US, one of the world’s COVID-19 hotspots and a major consumer of oil and gas, is witnessing a slow but steady decline in COVID-19 cases nationwide, though some states continue to buck this trend. Mexico’s cases are also declining, though the validity of official COVID-19 figures has been repeatedly questioned by the media.
As the northern hemisphere enters winter and colder weather, countries like the US, China and the nations of Europe are bracing themselves for another bout of COVID-19 outbreaks. Should this happen and further restrictions on movement and production be applied, prices may fall again.
OPEC+’s 9.7MMb/d global production cut had a positive impact in bringing prices up after they had plummeted into negative territory in mid-April. After initially refusing to cut production, Mexico did partake in the initiative, reducing its output by 100Mb/d during May and June. Output is yet to reach pre-pandemic figures.
OPEC is still dealing with the problem of countries that did not meet their required production cut. Iraq and Nigeria both failed to comply with production reductions. But another less expected nation, the UAE, has also recently fallen foul of agreed-upon production levels. According to Yahoo Finance, UAE pumped more oil than it should have in both July and August, pushing more crude into the market during a period when prices are struggling to climb.
But the trouble that prices have seen and the complexity of a truly global energy industry mean that an overflow of distillates – namely diesel, jet fuel and gasoil – has forced a reduction of crude processing at refineries worldwide. Reuters reports that crude processing at US refineries is 19 percent below the five-year average at 13.5MMboe/d