The 19th OPEC Plus Ministerial meeting was held on Sunday in virtual mode. During the meeting the alliance of the OPEC member countries has extended the agreement on limiting oil production until the end of 2022. The Meeting noted the ongoing consolidation of market fundamentals, with oil demand showing clear signs of improvement and OECD stocks falling, as the economic recovery continued in most parts of the world with the help of accelerating vaccination programmes. According to reports, the meeting welcomed the positive performance of Participating Countries in the Declaration of Cooperation (DoC) and the overall conformity to the production adjustments was 113% in June (including Mexico). In view of current oil market fundamentals and the consensus on its outlook, the Meeting resolved to reaffirm the Framework of the Declaration of Cooperation, signed on 10 December 2016 until the 31st of December 2022.
The OPEC plus meeting decided to adjust upward their overall production by 0.4 mb/d monthly starting August 2021 until phasing out the 5.8 mb/d production adjustment, and in December 2021 assess market developments and Participating Countries’ performance. The member countries agreed to continue to adhere to the mechanism to hold monthly OPEC and non-OPEC Ministerial Meetings for the duration of the Declaration of Cooperation, to assess market conditions and decide on production level adjustments for the following month. The organization of oil producing countries decided to hold the 20th OPEC and non-OPEC Ministerial Meeting on September 1, 2021.
In fact, OPEC is the international cartel consisting of the countries which produce more than 90 percent of the world’s oil and carry huge significance in the stabilization and growth of the global economy. The group hit by a rift between its two members states Saudi Arabia and United Arab Emirates (UAE) during recent years, which led to a decrease in production quotas of the members states during past one and half year, while coronavirus pandemic also caused a blow to the OPEC performance in recent years. The OPEC plus countries agreed during the meeting to gradually increase the production limits of the five member countries including Saudi Arabia, UAE, Russia, Kuwait, and Iraq. According to the decision of a recent meeting, the UAE would be able to produce 3.5 million barrels of crude oil a day beginning of May 2022, whereas Saudi Arabia has been permitted to increase its production from 11 million barrels to 11.5 million barrels a day. Similarly, other three nations have been allowed to increase their production a bit more than their current capacities.
In fact, the OPEC countries had effected more due to spread of coronavirus pandemic in the world, because the gasoline consumption of jet fuel was dropped to near zero due to imposition of pandemic SOPs, lockdown and other restrictions around the world, however due to gradual ease in the coronavirus SOPs and restrictions, the prices of oil have strengthen eventually around the world. The 13 member OPEC was turned into OPEC plus through inclusion of 10 more members during 2016. There are serious differences among OPEC member states on production quotas, prices and decision making process of the organization, however the OPEC has emerged as an effective platform for the member countries to manipulate the world economy according to their interests through increase or decrease of oil production. Despite all shortcomings.