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Worried about weak oil demand, OPEC pledges action

Published 19/10/2020, 16:59
© Reuters. FILE PHOTO: A 3D printed oil pump jack is seen in front of displayed stock graph and Opec logo in this illustration picture

By Alex Lawler, Ahmad Ghaddar and Vladimir Soldatkin

LONDON/MOSCOW/DUBAI (Reuters) - OPEC and allied producers on Monday pledged action to support the oil market as concerns mounted that a second wave of the COVID-19 pandemic will hobble demand and an earlier plan to raise output from next year would further depress prices.

Saudi Arabia, the biggest member of the Organization of the Petroleum Exporting Countries (OPEC), said no-one should doubt the group's commitment to providing support, while three sources from producing countries said a planned output increase from January could be reversed if necessary.

Already Russian President Vladimir Putin and Saudi Arabia's Crown Prince Mohammed bin Salman held two phone calls last week. Kremlin Dmitry Peskov spokesman said regular contact was necessary as the markets were volatile.

OPEC and its allies, including Russia, collectively known as OPEC+, have curbed output since January 2017 to try to support prices and reduce inventories.

"This group has shown, especially in this year, that it has the flexibility to adapt to changing circumstances when required. We will not dodge our responsibilities in this regard," Saudi Energy Minister Prince Abdulaziz bin Salman said.

"Nobody in the market should be in any doubt as to our commitment and our intent," Prince Abdulaziz told the opening of an OPEC+ ministerial monitoring committee (JMMC).

For now, OPEC+ is reducing production by 7.7 million barrels per day (bpd), down from cuts totalling 9.7 million bpd enforced from May 1 to Aug. 1. OPEC+ is due to reduce the cuts by a further 2 million bpd in January.

OPEC watchers, including analysts from U.S. bank J.P. Morgan, have said a weak demand outlook could prompt OPEC+ to delay the reduction in curbs.

"Demand recovery is uneven... Today this process has slowed down because of a second coronavirus wave, but has not yet fully reversed," Russian Energy Minister Alexander Novak told JMMC. Novak previously insisted on easing the cuts.

Four OPEC+ sources speaking on condition of anonymity said Monday's panel did not make any formal recommendation on changing policy for 2021 ahead of the next full OPEC meeting on Nov. 30-Dec. 1.

© Reuters. FILE PHOTO: A 3D printed oil pump jack is seen in front of displayed stock graph and Opec logo in this illustration picture

Brent oil prices traded flat at $43 per barrel.

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