OPEC+ Meeting: production levels are going to remain the same with an exception for two members

 

opec meeting on march 4

OPEC+ meeting ended on Thursday with Saudi Arabia reasserting its position as the shepherd of the block by leading the flock facing very little resistance against achieving its desired goal.

Saudi oil ministers are renowned for going poetic whenever they wanted to add extra weight to the points they love to make; in this context, HRH Prince Abdulaziz bin Salman Al Saud, is no exception.

At the outset of his speech he used two similies, in order to dramatize the position of Saudi Arabia to the global audience: “Let us be certain that the glimmer we see ahead is not the headlight of an oncoming express train.”

This is the position maintained by Prince Abdulaziz, long before the crucial meeting on March 4; since most members agree with him at the meeting, Saudi Arabia had clearly done the homework before publicly declared its intentions; Saudi officials had persuaded the members of the OPEC not to act on impulse by just focussing on the rising crude oil price at the expense of hidden dangers.

The meeting began with members congratulating themselves on the collective achievement – getting the crude oil price to a level that was unthinkable in the middle of the last year.

The members were full of praise for the de facto leader of the group, Saudi Arabia, for embarking on a voluntary production cut of 1 million bpd on its own for two months, starting from February that in turn stabilized the price.

The ministers agreed to maintain the production level of March for April as well, offering an exception for two countries – Russia and Kazakhstan; they were allowed to increase the production by 130,000 bpd and 20,000 bpd respectively; it was reported that the two countries were lobbying for an increase in production, citing the hikes of domestic demands.

The block made special thanks to Nigeria for compensating for the past excess production in line with agreed quotas at the previous OPEC+ meetings; Nigeria and Kuwait, meanwhile, maintained that the production level must remain at current level, although analysts expected the polar opposite from Nigeria, especially owing to its acute economic woes.

With the news about the rollover of the current production level for April too, Brent crude jumped almost 5% on Thursday evening, reflecting the palpable buoyancy of the traders.

World’s top consumers, meanwhile, expressed their disappointment at the news. India, for example, criticised the move as it could hamper the fragile recovery of its economy.

For weeks before the OPEC+ meeting, India had been calling for an increase in production so that oil prices would not rise steeply; its appeals appear to have fallen on deaf ears.

With no formidable, immediate challenge from US shale sector, the OPEC+ members will benefit from the rise in crude oil price for the next few weeks.

In addition, there will be millions of secondary beneficiaries too; they are the Asian workers that come to the Middle Eastern countries to make a living, whose livelihood depends directly on the viable oil market, which in turn offers a financial lifeline to the countries they come from – at a very difficult time due to the pandemic.

 

 

 

 

 

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