The Organisation of the Petroleum Exporting Countries says it sees plenty of downside risks for oil markets in the first half of 2021.
OPEC’s Secretary General, Mohammad Barkindo, said on Sunday at the 47th Meeting of the Joint Technical Committee.
“Amid the hopeful signs, the outlook for the first half of 2021 is very mixed and there are still many downside risks to juggle,” he said.
OPEC and its allies, known as OPEC+, decided in December to increase production by 0.5m barrels per day from January as part of the two million bpd gradual rise this year.
However, some members have questioned the need for a further boost due to the coronavirus pandemic.
Commenting on the outlook, Co-founder of Energy Aspects think tank, Amrita Sen, said, “Given fundamentals are weakening, it would be prudent for OPEC+ to hold output steady and there is a preference among some of the biggest producers to hold production flat.”
According to a Reuters’ report, OPEC’s leader, Saudi Arabia, has suggested a more cautious approach during previous meetings while OPEC member, the United Arab Emirates, and non-OPEC Russia said they preferred a speedier increase.
Barkindo added, “Curbs on social and economic activity remain in place in a number of countries, and there is concern about the emergence of a pernicious new strain of the virus.”
He further remarked that the global economy could strongly rebound in the second half of 2021 but sectors such as travel, tourism, leisure, and hospitality could take years to reach pre-virus levels.
OPEC+ was forced to cut production by a record amount in 2020 amid global lockdown measures on fuel demand.
OPEC+ first cut output by 9.7mbpd, then eased cuts to 7.7m and to 7.2m from January.
Barkindo stated further that OPEC now expected global oil demand to be led by developing countries and to rise to 95.9mpd in 2021, or by 5.9mpd from 2020, this is as the global economy is forecast to grow by 4.4 per cent.
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