Opec+ views oil market exuberance with 'cautious optimism'

Saudi Arabia's energy minister says introduction of vaccination programmes is the most important factor behind a recovery in demand

An oil pump jack in North Dakota. Russia is pushing for a proposal to add 500,000 bpd of supply back in the markets. AFP

Saudi Arabia urged members of the Opec+ producer alliance not to slow down in their determination to correct market imbalances.

"As we see light at the end of the tunnel, we must – at all costs – avoid the temptation to slacken off our resolve," Prince Abdulaziz bin Salman, Saudi Arabia's energy minister told an extraordinary meeting of Opec+ ministers.

He said the introduction of Covid-19 vaccination programmes was "the single most important factor in bringing about economic recovery", with implications for a sustained improvement in the demand for oil.

The minister, who alongside Russia heads a 23-member group of producers, said the optimism seen in markets following news of the efficacy of several vaccines should be balanced with vigilance.

"At the risk of being seen as a killjoy in the proceedings, I want to urge caution, even in this generally optimistic environment. The level of uncertainty in the world remains high," he said.

Oil prices dropped as the meeting began. Markets remained uncertain as to whether the producer group was likely to add more supply or roll over the current levels of curbs.

Brent, the international crude marker, was down 1.47 per cent, trading at $51.04 per barrel at 8.41pm UAE time. West Texas Intermediate, the key US gauge, was down 2.12 per cent at $47.49 per barrel.

Opec+ agreed last month to cut 7.2 million barrels per day of production for three months until March, subject to monthly reviews.

Earlier in 2020, the alliance had looked to bring back 2m bpd to the markets by the beginning of this year. However, the group reconsidered its position following the reimposition of lockdowns in several developed economies such as the UK and Germany as a new strain of the virus began to spread at the end of the year.