OPEC+ Meeting: alliance plans more frequent meetings to review production strategies

 

OPEC+ negotiations

A report by Bloomberg indicates that the members of the OPEC+ feel that the alliance must meet much more frequently than it does now, in order to gauge the oil market and then respond to demand with a firm focus on the revenues.

The two major players of the OPEC+, which had been at loggerheads in the past, especially during the early phase of the pandemic, do not seem to see eye-to-eye yet on the same issue.

They, however, do not appear to be poles apart either, as they were at the height of the Coronavirus crisis, until President Trump intervened and used his special talent that he always claims to possess – doing a deal while bringing warring factions together.

During the pandemic, Saudi Arabia wanted to cut the production drastically in order to stabilize the price, which saw plummeting the price below zero on April 20 for the first time.

Russia, on the other hand, wanted to keep pumping oil in order to bolster its coffers, having been hit by the sanctions by the West and rapid increase in virus infections.

The bone of contention between the two members left the rest in a damaging lurch.

Russia is still keen on increasing the production while assuming that the oil price will remain in $45 – 50 range in the foreseeable future. Saudi Arabia, meanwhile, wants to exercise caution in the light of the discovery of new variants of the Coronavirus across the globe.

Analysts were not deterred by the forthcoming OPEC+ meeting or the speculative production boost.  On the contrary, they kept investing as the usual factors such as US oil inventories dropped and rig count went up.

The disagreement is not just confined to the stratum of two players in the cartel. The report highlights the disagreement between some friendly Gulf neighbours too.

In this context, the nature of difficult discussions can be mimicked by a tanker that negotiates a volatile strait, when opposing sides lay siege sticking to their guns.


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