The Secretary-General of the Organisation of the Petroleum Exporting Countries, Mohammed Barkindo, has said the group and its allies must proceed conservatively with production policy decisions as the global oil market will flip from deficit to surplus in December.
“The surplus is already beginning in December,” Barkindo told reporters on the sidelines of the ADIPEC conference, citing data from the US that has shown oil stocks building in the past few weeks, according to S&P Global Platts.
He said, “These are just signals that we have to be very, very careful. The projections show throughout the quarters of next year that there could be oversupply in the market.
“This is also further evidence of why we should be very cautious, measured in the decisions we take every month.”
OPEC and 10 allies have been gradually increasing production quotas by 400,000 barrels per day each month to taper their record output cuts that began during the pandemic-induced market crash of 2020, resisting pressure from several key consuming countries, including the US, Japan and India, to release even more volumes to cool down rising oil prices.
OPEC+ ministers will next meet Dec. 2 to decide on January production levels.
“We have a vested interest in making sure the global economic recovery continues, despite the uncertainties,” Barkindo said. “We think we are on a trajectory of recovery. For us, in OPEC, we will continue to do whatever is necessary that this recovery does not falter.”
According to S&P Global Platts, the OPEC+ cuts are largely credited with rescuing crude prices, with Dated Brent going from a 21-year low of around $13 per barrel in April 2020 to more than $80 per barrel now.
In its latest monthly oil market outlook Nov. 11, OPEC downgraded its 2021 global oil demand forecast by 160,000 bpd, citing weaker economic factors in China and India, but indicated the market would remain tight through the end of the year.
It estimated that the call on OPEC crude would average 29.57 million bpd over the fourth quarter and then drop to 26.81 million bpd in the first quarter of 2022, compared with the 27.45 million bpd that it pumped in October.
