The members of the OPEC group of oil-producing countries and their allies will continue talks on Tuesday, a day after they adjourned without reaching a deal on February production levels.
Twenty-three countries in total are trying to reach a compromise between those who favor keeping in place current cuts to production levels because of market uncertainty created by the coronavirus pandemic, and those who favor releasing an extra 500,000 barrels per day (bpd) onto the market next month.
The two heavyweights among the producers gathering on Tuesday, Saudi Arabia and Russia, are on opposing sides of the debate, with Riyadh urging caution and Moscow keen to boost production.
Demand for crude cratered under the effects of the virus in 2020 and oil-producing nations have been trying to adjust their output accordingly in order to support prices.
The last OPEC+ last videoconference summit, held from November 30 to December 3, “paved the way for a gradual return of 2 million barrels per day to the market over the coming months” in the words of OPEC’s general secretary Mohammed Barkindo, while leaving room for adjustments in reaction to market movements.
The first step to implementing that agreement was an increase in 500,000 bpd in January with a commitment to meeting at the beginning of each month to set production levels for the following month.
Disagreements on the way forward are nothing new for the OPEC+ grouping, which now faces the added challenge of trying to factor in a pandemic that shows no sign of abating and a vaccination campaign that has got off to a slower than hoped start in some regions.
Prices for both North Sea Brent Crude and West Texas Intermediate (WTI), which are often sensitive to OPEC+ discussions, were stable in early trading on Tuesday at around $50 a barrel.