OPEC+ Output Cut Ease Unlikely to Unbalance Int’l Oil Markets
EghtesadOnline: The OPEC+ decision Dec. 3 to ease its output cut by an initial 500,000 bpd in January is unlikely to unbalance oil markets amid hopes for oil demand recovery from the early introduction of coronavirus vaccines, Petroleum Association of Japan President Tsutomu Sugimori said.
The deal, announced Dec. 3, calls for the OPEC+ alliance to boost production by an initial 500,000 bpd in January, after which ministers will meet monthly to determine whether to tweak that for the month ahead, S&P Global reported.
The producer group, which controls roughly half of global crude production capacity, is currently cutting 7.7 million bpd from November 2018 levels.
Now the cuts will scale back to 7.2 million bpd from January and then be fine-tuned each subsequent month. No date has been set for the January meeting.
In a statement, Sugimori said the level of the output cut ease was "small" and it "would not unbalance the oil supply and demand balance significantly."
"In the market, there are greater hopes for the oil demand recovery from such factors as an early implementation of Covid-19 vaccines," he added.
The recent developments and moves to implement possibly effective Covid-19 vaccines have raised hopes for a recovery in transport fuels demand, which has plummeted in the wake of the pandemic.
In the UK, Pfizer's Covid-19 vaccine was given the green light by British Prime Minister Boris Johnson Dec. 2 to begin mass inoculation by early next week; the vaccine is said to be 95% effective in preventing illness.