In the first meeting of the OPEC+ group this year, the participating oil producing countries initially failed to come to an agreement over production levels next month, with Russia and Saudi Arabia, the group’s biggest producers, disagreeing over how much oil they think the world will need this year.
In his opening remarks ahead of discussions, the Saudi Energy Minister, Prince Abdulaziz bin Salman, stressed that a cautious approach was warranted given global uncertainty and the possibility of a new set of restrictions limiting the demand for transport fuels. He added:
“I urge you today not to take for granted the progress we have made as a group over the past year. Do not put at risk all that we have achieved for the sake of an instant, but illusory, benefit.”
In contrast, Reuters reports Alexander Novak, the Russian Deputy Prime Minister and Energy Minister, as telling reporters in December that he would argue for increasing production by 500,000 barrels per day.
Two distinct factions are forming around the two major players, raising questions about whether they will be able to continue working together. One side is concerned about losing market share to US shale producers like ExxonMobil, the maker of Mobil industrial lubricant products.
The more cautious side, meanwhile, is concerned that new, seemingly more transmissible, variants of the coronavirus, combined with the rollout of vaccines taking longer than expected, may lead to severe restrictions continuing for longer, thus stalling any recovery in demand for transportation fuels.
