The oil-producing countries gathered within the “OPEC+” group agreed on January 4 and 5, 2021 by videoconference on their production ceilings for the months of February and March 2021. What to remember.

The context

In the last quarter of 2020, global crude oil supply was estimated at nearly 91.9 million barrels per day (mb/d), more than half of which came from OPEC+ producers (OPEC and 10 other producers in first rank, including Russia), according to the latest available data relayed by IFP Énergies nouvelles. The oil market continues to rebalance as global demand for crude rose to 94.7 Mb/d in the last quarter of 2020 (compared to around 100 Mb/d in 2019).

As a reminder, the OPEC+ countries had agreed at the beginning of December 2020 to increase their cumulative production by 0.5 Mb/d in January 2021. This corresponds to a level of supply 7.2 Mb/d lower than the level of production considered by this group, i.e. that of October 2018 (except for Saudi Arabia and Russia, countries for which the "reference" production is set at 11 Mb/d).

In December 2020, OPEC also agreed to hold a monthly meeting starting in January 2021 to " evaluate market conditions and decide on future production adjustments for the following month " (the monthly production adjustments not to exceed 0.5 Mb/d).

Commitments for February and March 2021

The press release published on January 5 by OPEC ⁽²⁾ highlights the “ unprecedented events of 2020 and the brutal impact of the Covid-19 pandemic on the world economy and markets ”. Based on this observation, Saudi Arabia has pleaded in recent days for a " cautious approach " in the face of uncertainties over global oil demand, while Russia wanted to increase its production (so that American producers do not regain market share). market by taking advantage of a rise in prices).

Following discussions within OPEC+, only Russia and Kazakhstan are finally authorized to very slightly raise their level of production in February and March 2021. Russian oil production, capped at 9.119 Mb/d in January 2021, could in particular rise to 9.184 Mb/d in February 2021 and 9.249 Mb/d in March 2021.

Saudi Energy Minister Abdelaziz bin Salman also announced Riyadh's intention to unilaterally lower its production quota (currently set at 9.184 Mb/d) by 1 Mb/d, thus reassuming its role as " swing producer ” – which it had abandoned at several periods (between July 2014 and December 2016 and in March-April 2020) – to maintain oil prices. Ultimately, the cumulative production of OPEC+ should therefore fall in February and March 2021.

The OPEC press release calls again on the producers of the OPEC+ group to respect their production quotas. Members that have produced more than their production caps must submit their “compensation” plans to the OPEC Secretariat by January 15, 2021.

Oil prices

Following the announcements by OPEC+ and Riyadh, the price of a barrel of Brent rose above $54, a level which had not been reached since the end of February 2020.

IFP Énergies nouvelles reports, for the month of December 2020, " several factors at the origin of the relative firmness of oil prices: the good performance of the financial markets, the weakness of the dollar, the drop in American oil stocks " (as well as the rise of tensions with Iran, " also likely to support prices "). A hypothetical “war” to defend market share would probably bring the price of oil down to around $40/bbl, or even less ”, specifies IFP Énergies nouvelles.

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