According to Abdelmadjid Attar, the energy minister of Algeria, the OPEC+ group may consider extending its cuts well into 2020, possibly even deepening them if market conditions warrant such a move.
The current OPEC+ production cuts are due to start tapering off from January next year, from 7.7 million barrels per day (bpd) to 5.7 million bpd. Previous OPEC forecasts had predicted a resurgence in the demand for oil, but with coronavirus cases around the world rising, combined with rising oil production from Libya after rival factions agreed to lift a blockade, some believe the cuts may need to be maintained to keep markets stable.
Speaking in an industry event, Attar said:
“I can assure you that OPEC remains committed to taking appropriate actions, in cooperation with its partners in the Declaration of Cooperation, in a manner that is proactive and effective. This includes the possibility of extending today’s production adjustments into 2021, as well as deepening these adjustments, should market conditions require.”
Two days earlier, Saudi Arabia’s Minster of Energy minister voiced something similar. He suggested that the deal may be amended slightly if participating countries agree, as has happened in the past.
While oil demand is expected to ultimately return in the medium term once the COVID-19 pandemic is under control, many oil majors are looking to diversify away from hydrocarbons. For example, BP, which makes Castrol lubricant and grease products, expects to be producing 40% less oil and gas in 2030 as it shifts capital expenditure towards low-carbon energy generation.