COVID-19: OPEC lowers global oil growth forecast

[Edoman]

COVID-19: OPEC lowers global oil growth forecast
• Cartel mulls output cut by 1.5m bpd
March 6, 2020
 
in Business, News Update

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The Organisation of Petroleum Exporting Countries (OPEC) has marked down its global oil demand growth in 2020 as a result of the coronavirus (COVID-19) outbreak from 1.1 million barrels per day (bpd) to 480,000 bpd.

The Organisation is also proposing to cut oil output by 1.5 million barrels per day if its non-OPEC allies led by Russia agree to the proposal, which will be presented to the 8th OPEC and non-OPEC Ministerial meeting today. If the proposal sails through, OPEC members will cut production by 0ne million barrels per day while non-OPEC allies will cut production by 500,000 barrels per day.

This was disclosed this at the 178th extraordinary meeting of the Conference of the Organization of the Petroleum Exporting Countries held in Vienna, Austria, on Thursday.

The oil cartel noted that the COVID-19 outbreak has had a major adverse impact on global economic and oil demand forecasts in 2020, particularly for the first and second quarters adding that the global oil demand growth in 2020 is now forecast to be 0.48 million barrels per day (mbpd), down from 1.1 mbpd in December 2019.

Moreover, the unprecedented situation, and the ever-shifting market dynamics, means risks are skewed to the downside, the group said, noting that the further impact of the COVID-19 outbreak on oil market fundamentals necessitates further continuous monitoring.

The Conference held under the Chairmanship of its President, Minister of Energy of Algeria and Head of its Delegation, His Execellency, Mohamed Arkab, reviewed the report and recommendations of the Joint Ministerial Monitoring Committee (JMMC), whose work continues to be ably supported by the Joint Technical Committee (JTC) and the OPEC Secretariat. The Conference also took note of oil market developments since it last met in Vienna on December 6, 2019 and reviewed the oil market outlook for the remainder of 2020.

Accordingly, in view of the current fundamentals and the consensus on market perspectives, the Conference decided to recommend to the 8th OPEC and non-OPEC Ministerial Meeting to extend the adjustment levels agreed at the 177th Meeting of the Conference and the 7th OPEC and non-OPEC Ministerial Meeting for the remainder of the year.

It also agreed to recommend to the 8th OPEC and non-OPEC Ministerial Meeting a further adjustment of 1.5 mbpd until 30 June 2020 to be applied pro-rata between OPEC (1.0 mbpd) and non-OPEC producing countries (0.5 mbpd) participating in the Declaration of Cooperation.

The Conference commended all OPEC Member Countries, as well as non-OPEC countries participating in the Declaration of Cooperation, for their continued commitment to achieving and sustaining balance and stability in the market.

Member Countries reaffirmed their continued focus on fundamentals for a stable and balanced oil market, in the interests of producers, consumers, and the global economy. The Conference emphasized the ongoing dialogue with consuming countries, and the consultations undertaken in a collegial spirit before reaching decisions. Member Countries are resolute and committed to being dependable and reliable suppliers of crude and products to global markets.

The Conference confirmed that its next Ordinary Meeting will convene in Vienna, Austria, on 9 June 2020, and noted that September 2020 will mark the 60 Year Anniversary since the founding of OPEC in Baghdad in 1960.