The global economy and oil markets will not see a quick recovery next year, Algerian Energy Minister Abdelmadjid Attar cautioned on Monday as he opened a meeting of the Organisation of the Petroleum Exporting Countries (OPEC).
The 13-country cartel met for online talks on delaying an oil production increase that OPEC and its Russia-led allies, jointly known as OPEC+, had planned for the start of 2020.
Recent news of promising COVID-19 vaccine trials offered hope, but the global roll-out of these vaccines would take time and would only fully take effect in the second half of 2021, current OPEC president Attar told fellow ministers.
“The route to recovery is long and bumpy,’’ he said, predicting that the pandemic will have long-lasting effects.
“The shock for the oil industry is massive and its severe impact will likely reverberate in the years to come,’’ said Attar.
Following the OPEC talks on Monday, negotiations with the rest of the OPEC+ group are scheduled for Tuesday.
After the COVID-19 pandemic hurt global energy demand and oil prices earlier this year, OPEC+ decided in April to cut production by 9.7 million barrels per day (bpd), reducing global supply by 10 per cent.
Under the agreed OPEC+ plan, the cut was relaxed by 2 million bpd in August and is scheduled to ease by nearly 2 million bpd more in January.
OPEC heavyweight Saudi Arabia, Russia and other involved countries want to delay the January rise, as many major economies are still grappling with a second COVID-19 wave.
Oil prices initially dropped on Monday as markets reacted to reports that producers within the OPEC+ disagree on whether to opt for a simple delay, or a gradual increase in early 2021.
However, prices regained ground, and European Brent oil traded at 47.90 dollars per barrel as the OPEC meeting started, only 0.26 dollars lower than on Friday.
The U.S. benchmark crude oil brand West Texas Intermediate rose to 45.66 dollars, 0.13 dollars higher than on the previous trading day.