MOSCOW, December 3. /TASS/. The final round of talks between OPEC+ oil-exporting nations will be held on Thursday, December 3. Ministers are to find a subtle compromise solution on crude production levels for 2021 based on controversial views inside the alliance. Experts tend to believe that a way out will be eventually found as no one is interested in the falling oil price.
Things are heating up inside the OPEC+ oil alliance, which accounts for 40% of global production, as the new year approaches. The participating countries intended to ease the strongest crude production cuts ever approved in April, starting January. It was planned to reduce the output reduction level from 7.7 mln barrels per day to 5.8 mln barrels per day, meaning members of the alliance planned to increase production by almost 2 mln barrels per day as new year starts.
However, they have been holding active negotiations on how well-timed the easing is amid a second wave of lockdowns related to the coronavirus pandemic. Some countries, such as Saudi Arabia, are convinced that the time is not ripe yet for boosting oil supply, and the current parameters of the agreement should be extended by at least three months.
The United Arab Emirates unexpectedly argued against that plan. It is only possible to extend present cuts if all participants of the deal observe the agreements, Abu Dhabi said, adding that as some of the partners have failed to reduce oil production in accordance with quotas extension is senseless. Finally, Russia and Kazakhstan suggested that production be increased gradually, starting January, during the first quarter, as isolation measures in many countries are not as strong as in the spring.
The participating states failed to find an option suitable for all at a meeting of the monitoring committee on November 17, and during follow-up consultations. Even the ministerial conference on November 30 attended only by OPEC members was unfruitful either. Members of the cartel failed to take a decision determining production levels starting NY until a preliminary agreement with non-OPEC partners is reached. The OPEC+ meeting scheduled for December 1 was postponed for December 3.
Late on December 2 first glimpses of hope appeared. The Energy Intelligence agency reported with reference to delegates that long informal consultations finally "returned to the diplomatic field", whereas unnamed Bloomberg sources said that agreements would be made on Thursday. No one unveiled any details of the emerging consensus though.
Analysts interviewed by TASS believe that no one is interested now in failed talks similar to the spring scenario when OPEC+ did not reach an agreement on cuts extension at a Vienna meeting on March 6. "They will definitely find a compromise. Scuttling the deal is not worth the effort now, whereas with too strict conditions it will hardly be implemented," Finam’s analyst Alexei Kalachev said. He expects ministers to agree a mild recovery of oil production starting January and continue regularly monitoring the situation.
Fitch Corporations Department Director Dmitry Marinchenko shares the view, noting that the market assumes now that a consensus will be reached, whereas an opposite outcome will push prices down.