OPEC+ Extends First Phase Production Adjustment till July 2020

The Organization of Petroleum Exporting Countries (OPEC)

The 179th Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) was held via videoconference, on 06 June 2020, under the Chairmanship of its President, HE Mohamed Arkab, Minister of Energy of Algeria and Head of its Delegation.

The Conference welcomed new ministers: HE Dr. Ali Haidar Abdulameer Allawi, Minister of Finance and Acting Minister of Oil of Iraq and HE Tareck El Aissami, People’s Minister of Petroleum of the Bolivarian Republic of Venezuela.

The Conference thanked their predecessors in office: HE Thamir Abbas Al-Ghadhban of Iraq and HE Manuel Salvador Quevedo Fernandez of Venezuela.

The Conference considered the Secretary General’s report, the report of the Economic Commission Board, as well as various administrative matters. The Conference took note of oil market developments since it last met in Vienna on 5 March 2020 and reviewed the oil market outlook for the remainder of 2020 and into 2021.

It noted the positive ramifications of the decision taken by all Participating Countries in the Declaration of Cooperation (DoC) at the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting on 12 April 2020.

The Conference noted the additional adjustments from Saudi Arabia (1 mb/d); the UAE (100 tb/d); Kuwait (80 tb/d) and Oman (10-15 tb/d) in June; the announcements of voluntary adjustments from several countries, such as Norway and Canada; as well as various oil company statements revising downward production plans and shutting in production, in view of the sudden and acute imbalance in the global oil markets.

It was emphasized that the production adjustments in May, as well as the gradual relaxation of many of the lockdown measures as a result of the COVID-19 pandemic across the globe and an economic pick-up, had contributed to a cautious recovery and the return of more stability in the oil market. Nevertheless, with global oil demand expected to contract by around 9 mb/d for the whole of 2020, consolidating this gradual recovery will require continued commitment and intensified efforts from DoC Participating Countries and all major producing countries.

In light of these facts, and in view of current fundamentals, all Member Countries agreed to the five key elements in reaching their unanimous decision, which will be recommended to non-OPEC Participating Countries. They:

  1. Reconfirmed the existing arrangements under the April agreement.
  2. Subscribed to the concept of compensation by those countries who were unable to reach full conformity (100 per cent) in May and June, with a willingness to accommodate it in July, August and September, in addition to their already agreed production adjustment for such months.
  3. Agreed the option of extending the first phase of the production adjustments pertaining in May and June by one further month.
  4. Recognized that the continuity of the current agreement is contingent on them fulfilling elements 1 and 2 above.
  5. Agreed without dissent that the full and timely implementation of the agreement remains inviolable, based on the five key elements.

The Meeting therefore agreed unanimously to extend the first phase of the production adjustment agreed at the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting for a further month, to now run from 1 May 2020 to 31 July 2020.

The Meeting called upon all major oil producers to contribute proportionally to the stabilization of the oil market, taking into consideration the substantial efforts made by the OPEC and non-OPEC Participating Countries of the DoC.

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 both producing and 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 expressed its sadness on the news of the passing of Mr. Hossein Kazempour Ardebili, Governor for OPEC for IR Iran, the longest serving member of the OPEC Board of Governors. Mr. Kazempour served his country with distinction and was highly regarded by his peers. The OPEC Conference expressed its deepest and heartfelt condolences to the family of Mr. Kazempour.

The Conference confirmed that its next Ordinary Meeting will convene in Vienna, Austria, on 30 November 2020, and noted that September 2020 will mark the 60 Year Anniversary since the founding of OPEC in Baghdad in 1960.

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