OPEC Mulls Deeper Output Cuts in 2021

OPEC Mulls Deeper Output Cuts in 2021

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are looking into the possibility of further cuts early next year in an effort to try and revitalize the oil market, according to Reuters.

There is already a withstanding agreement to cut global production by around 6 million barrels per day (bbl/d) from January. However, a weaker than expected energy demand has seen the oil glut increase. Consequently, one Russian source who wished to remain anonymous told Reuters: “It looks like we will have to cut deeper in Q1.” 

According to an OPEC source, producers are “exploring many options beside a rollover (of existing cuts).”

There seems to be support from certain oil-producing states, such as Algeria (holder of the rotating OPEC presidency), for backing an extension to existing supply cuts. The Algerian Energy Minister, Abdelmadjid Attar, said keeping current cuts into H1 2021 could be considered at the next OPEC+ meetings.

OPEC+ is scheduled to meet over November 30 and December 1 to set policy.

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