Opec and non-Opec oil producers will need to boost efforts to accelerate the global oil market rebalancing process despite a recovery this year, the secretary general of Opec said.
Opec+, the group of producers led by Saudi Arabia and Russia, should remain “cautious and attentive” to an ever-evolving market situation, Mohammad Barkindo told an Opec+ joint technical committee meeting on Wednesday.
"Constructive engagements in a transparent fashion, based on mutual respect among all participating countries [of the 2016 Declaration of Co-operation], remain key to our success," he said in a statement carried by the UAE state news agency Wam.
The technical committee met ahead of Opec’s Joint Ministerial Monitoring Committee (JMMC) and the Opec and non-Opec ministerial meetings planned for Monday next week.
Opec+ is bringing two million barrels per day of oil back to the market by the end of this year. It is set to decide in October whether to bring an additional 400,000 bpd of supply.
Oil demand is bouncing back as the global economy recovers from the pandemic-driven slowdown that disrupted world trade last year and severely affected the aviation and tourism sectors. The world economy, which slid into a deep recession in 2020, is expected to expand 6 per cent this year, according to the International Monetary Fund.
Despite the spread of the more virulent Delta strain of the coronavirus, the oil producers' group expects demand for 2022 to exceed pre-pandemic levels, reaching 100.8 million bpd. Demand growth in 2021 is estimated at six million bpd, with global consumption hitting 96.7 million bpd, Opec said earlier this month.
A stronger-than-expected economic recovery in the second half of this year has resulted in demand exceeding supply, pushing oil prices higher. Brent, the benchmark for more than half of the world's trade oil, topped $80 a barrel this week before receding. On Thursday, it was down 0.05 per cent trading at $78.60 at 10:39am UAE time. West Texas Intermediate, the gauge for US crude, was up 0.09 per cent trading at $74.90.
"As we approach the final quarter of 2021, it is clear that this has been a year of recovery," Mr Barkindo said at Wednesday’s meeting.
"The commitment by all DoC participating countries to reach their voluntary production adjustment levels and ensure that compensation volumes are met is contributing to the positive market momentum we are seeing this year," he said.
The secretary general said that the latest decisions of the producers' group are helping in balancing the market fundamentals, by addressing rising demand while guarding against potential excess in supply.