Energy leaders leave door open to more cuts as virus spikes

DUBAI, United Arab Emirates (AP) — Saudi Arabia's minister of electricity, said on Monday that world energy suppliers are able to tweak a deal to prolong supply cuts by the end of 2022 that anticipates continued declining demand for oil at the height of the coronavirus pandemic in Europe and the U.S.

The Prince Abdulaziz bin Salman said during the ADIPEC energy conference in Abu Dhabi that takes place almost this year, "OPEC has been and continues to be proactive."

Prince Abdulaziz said, "We hold our flexibility in our hands without clearly agreeing to how much 7.7 million barrels of fuel a day and more will continue into potential cuts.

"To reach everybody, I don't set the policy lines," he said.

The OPEC oil cartel, headed by Saudi Arabia, and non-OPEC nations like Russia, decided, in April or one-tenth of the world s output, to slash up to 10 million barrels of crude oil a day by July, to avoid oil prices from plunging into lower crude demand.

The so-called OPEC+ deal aimed at alleviating those cuts by the end of the year to 7,7 million barrels daily and 16 months from January to almost 6 million barrels daily.

Suhail al-Mazrouei, UAE energy minister, also expressed trust in the OPEC + agreement and stated that this arrangement succeeded.

"We've also proven to be a highly disciplined group," he said.

OPEC+ countries meet again on 17 November, but they cannot promise a deeper decrease in their export limits by 2021, since certain countries lose income.

Brent crude, the international benchmarks, traded around $40 a barrel on Monday. U.S. crude index traded only above $38 a barrel. The outbreak also slowed the oil market, impacting main income for the countries that manufacture oil.

In the next winter and flu seasons, there is no guarantee of a recovery with major European cities introducing numerous lock-up initiatives because of the troubling increases in new coronavirus cases.

Prince Abdulaziz said the present arrangement is always to be tweaked although oil-producing nations would expect a cure can reduce the virus and assist the planet in acquiring a sense of mobility.

"The April Agreement considered what could happen and decided proactively to prepare himself for the worst," he added.

A new government in Washington led by President Joe Biden might affect oil demand, particularly if it is in a position to reinvigorate the US economy and monitor the COVID-19 outbreak, which has reached record highs in the past few weeks.

Biden could also influence oil prices if they are able to drive through a package of stimulus that raises consumer spending, or if they are able to calm off the Chinese-to-China trade war and to reengage with Iran, which could contribute to the elimination of US sanctions for Iranian exports of oil.

Prince Abdulaziz stated that nations that produce electricity can cope with everything, and that in the past, the OPC, of which Iran belongs, has been able to contend with revolution.

Mohammed Barkindo, OPEC Secretary-General, has struck a hopeful note for the future of oil and said that even though almost 9.8 million barrels of oil are contracted daily in 2020, the next year's projections are upgraded.

He added that the OPEC+ deal countries have been compliant with cuts since May. "No cause for alarm," he stated.

Similarly, Sultan al-Jaber, CEO of the Abu Dhabi National Oil Company said that world usage already amounted to 75 million barrels of oil a day in March and April, at a height of lockdowns. Oil production, he said, has only decreased to below 90 million barrels a day for 12 weeks.

"We know that when all that is done, the world will still need oil and gas," he added.

"We expect the demand for oil to rise to more than 105 million barrels daily by 2030."

Russian energy deputy minister Pavel Sorokin, however, claimed that before two years he did not anticipate a complete recovery in air transport.

Although he anticipates that oil demand will rise in the next ten years, he said that it will take 2 to 3 years before that demand hits again or near to 100 million barrels per day.

He spoke to the Russian media regarding the recommendation for the long-standing Minister of Oil, Alexander Novak, as Deputy Premier. Novak played a crucial role in Russian talks with OPEC that contributed to global cuts in demand.