OPEC+ producers are leaning toward rolling over the production cut and delaying plans to boost output in January despite a rally in prices, Reuters reported, citing three sources close to the alliance. These producers are keen to support the market during the new wave of COVID-19 pandemic and the return of Libyan supply. OPEC+ was due to boost output by 2 million bpd in January but has been reconsidering such plans due to persistently weak demand.
The sources said Russia and some members would likely agree with rolling over the current production cuts into March 2021 if needed. However, the UAE and Nigeria previously wished for a higher OPEC+ quota. Meanwhile, Iraq has talked about requesting a waiver from 2021 reductions. Goldman Sachs said, the UAE’s push would unlikely derail the extension, while Iraq has previously said it would support OPEC+ unanimous decision.
Some analysts expect OPEC+ to roll over the cuts into the second quarter of 2021, citing possible price declines and demand uncertainties. Promising trial results of some COVID-19 vaccines in the past week have sparked hopes of economic recovery and oil demand rebound next year, boosting oil prices to its highest since March near $49/barrel. However, economists warned that vaccines would not be a quick fix for the current downturn because it still needs further tests and requires months to distribute widely.
