[ad_1]
WWhen oil ministers from the world’s largest fossil fuel nations meet via webcam this week to make global oil market decisions in 2021, they could be forgiven for indulging in some festive cheer.
Oil prices have more than doubled since dropping below $ 20 a barrel and hitting a 21-year low during “Black April”, when Covid restrictions brought major economies to their knees and caused that. believed to have been the worst month in the history of the oil industry.
The atmosphere within the Organization of the Petroleum Exporting Countries (OPEC) could be even livelier after a rally of nearly a third in the past month alone, as vaccine news offered the first hopes of a real recovery for the global economy. The price of a barrel of Brent crude oil is currently around $ 48, while the price of US oil is around $ 45 per barrel.
A return to $ 50 per barrel is therefore possible by the end of the year. But this victory for OPEC “petronations” did not come without compromise, and many within the cartel may be eager to shake off the production restrictions that have helped sustain oil prices.
This is the question oil ministers need to answer this week as they decide how far they can go to ease the strict limits on how much oil will be produced and exported next year.
Earlier this year, OPEC and its allies agreed on a record cut in oil production of 9.7 million barrels per day – or 10% of global production – which marked the end of the bitter war. prices between Saudi Arabia and Russia.
A new plan to allow 2 million more barrels of oil per day to re-enter the global market could pose a risk to its fragile recovery, but keeping the historic production cuts in place risks causing further economic suffering for those members of the global market. ‘Opec that rely on oil for filling. the coffers of the country.
OPEC will have to take a very careful reading of the global economic prospects. US banking giant Goldman Sachs, one of the most authoritative voices in the global oil market, believes the oil market is ripe for a comeback in 2021 – after a “winter speed boost” of the renewed Covid-19 restrictions – as a demand for resources. natural returns. Others are less convinced.
Russ Mold, an investment director at online broker AJ Bell, warned the jury is still out on whether the pandemic’s effect on the global economy will be inflation, stagflation or deflation.
“The bond market still seems to believe that inflation and growth will remain subdued for some time, but commodities seem to tell a different story,” he said. “The Bloomberg Commodity Index is at a two-year high and if commodity prices really start to rise, they could start fueling expectations of higher inflation on their own.”
Goldman also warned that the two-day meeting risks reigniting tensions that have eased within the cartel over the past year. The potentially devastating price war that threatened to erupt between two of its main members in the spring emerged not long after the cartel’s authority was shaken by Qatar’s decision to renounce its membership. News this month suggests that the UAE could follow suit.
“With another Opec + meeting approaching, the uncertainty over the group’s decision is rising again,” Goldman analysts said in a statement last week. “Beyond the outcome of another quota decision, however, there are renewed concerns for the organization’s future.”
OPEC may have won the battle of 2020, but the year ahead could still mean war.
Source link
