Opec+, the producer alliance led by Russia and Saudi Arabia, will continue to implement output cuts to restore stability to oil markets in the wake of declining demand due to the coronavirus pandemic, according to Opec’s secretary general Mohammed Barkindo.
“Earlier, when we met, we were hopeful, almost optimistic, that this second half of 2020 will begin to see a recovery, both in the global economy as well as demand for energy and oil," Mr Barkindo said while speaking at the virtual India Energy Forum by CERAWeek on Monday. "Unfortunately, both the economic growth as well as the demand recovery remains anaemic at the moment due largely to the spread of the virus. We are determined to stay the course [in balancing markets].”
However, the group does not expect a “relapse of massive contraction” in oil demand that was seen in the second quarter, he said.
Opec+ undertook a historic level of production cuts of up to 9.7 million barrels per day between May and July to reverse a record plunge in demand due to the pandemic. The alliance is currently drawing back 7.7m bpd from the markets.
Oil prices fell on Monday as rising coronavirus cases in the US and Europe increased concerns about energy demand, while Libya’s return to the market also weighed on prices.
Brent, the international benchmark for crude, was down 2.71 per cent, to trade at $40.64 per barrel at 6.14pm UAE time. West Texas Intermediate, the key gauge for US oil, was down 2.84 per cent at $38.72 per barrel.
Oil production in Libya, an Opec+ member and home to Africa's largest crude reserves, is expected to rise above 1 million barrels per day in the next four weeks after the country reopened its oil ports following an improvement in the security situation, according to the state energy firm.
On Friday, the National Oil Corporation (NOC) said it lifted a force majeure on oil exports from the eastern ports of Sidra and Ras Lanuf. Force majeure refers to an unforeseen event outside of a party's control that prevents it from fulfilling its obligations under a contract.