Algeria supports extension of OPEC supply cuts

Algeria supports extension of OPEC supply cuts
Algeria supports extension of OPEC supply cuts :File Photo

Algeria backs possible extension of OPEC supply cuts that could avoid another collapse in prices as countries continue to battle COVID-19.

OPEC member Algeria came out in support of deferring a planned increase in OPEC+ oil output from January, a day after Russia’s energy minister raised the possibility with the country’s oil companies.

Algeria, which holds the presidency of the Organization of the Petroleum Exporting Countries, supports a possible extension of OPEC+ supply cuts for the first few months of 2021 to avoid another collapse in prices, the country’s energy minister said on Tuesday.

OPEC and allies, led by Russia, together known as OPEC+, are scheduled to reduce cuts of 7.7 million barrels per day (bpd) by nearly 2 million bpd from January.

Algerian Energy Minister Abdelmadjid Attar told state news agency a second wave of the COVID-19 pandemic meant the oil market faced a “very dangerous” situation.

On Monday, top managers of Russian oil companies and Russian Energy Minister Alexander Novak held talks on the possible postponement of an easing of restrictions into the first quarter of 2021, two industry sources said.

The sources said the final oil output decision will be made by Russian President Vladimir Putin, who last month did not rule out extending deeper oil cuts for longer if market conditions warranted.

At a ministerial meeting last month, Saudi Arabia, the biggest OPEC producer, said no one should doubt the group’s commitment to providing support for the market.

“We will not dodge our responsibilities in this regard,” Saudi Energy Minister Prince Abdulaziz bin Salman said.

As coronavirus cases surge in Europe and the United States and new government restrictions on mobility eat into oil demand, OPEC+ action to support the oil market is likely, analysts have said.

“We believe that additional supply from OPEC+ may not be needed just yet and the alliance might choose to delay the … tapering decision by a quarter,” JP Morgan said last week.

OPEC+ is scheduled to meet over November 30 and December 1 to set policy.