Opec and its non-Opec allies will examine recommendations to deepen their existing production cuts by either 600,000 b/d or by 1mn b/d when they meet in Vienna this week, Equatorial Guinea's oil minister Gabriel Obiang Lima said today. The recommendations have been made by the group's Joint Technical Committee (JTC).
"At this moment, they are going to be presenting the two alternatives. I think we will do something that definitely supports us all. Clearly the 1mn b/d is very important, I think it will send a very important message," Obiang Lima said. "We are [likely] going with the conservative 600,000 b/d, but definitely the 1mn b/d would be the more normal thing for us to do. But that cannot be done only by one member."
Obiang Lima did not clarify if the proposed additional cuts would apply to the second quarter only.
Opec and allied non-Opec producers — known as Opec+ — are meeting in Vienna on 5-6 March. A meeting of the Joint Ministerial Monitoring Committee (JMMC), which studies the group's compliance with its existing production commitments, is under way.
The economic impact of the coronavirus outbreak, along with seasonally weaker demand, have underpinned the need for Opec+ to consider revising quotas. "Our key client, China, is almost shut down. Europe is in the winter right now. The same thing in the US," Obiang Lima said, adding that Opec+ is closely monitoring the effect of coronavirus on the aviation sector and is calling on other countries to reduce output.
The minister acknowledged that the proposal for an extra 1mn b/d reduction is "pertinent" under the circumstances, but he stressed that there is a higher likelihood of Opec+ opting for a 600,000 b/d cut in the short term.
"The numbers that they are suggesting, probably the initial one, the more conservative one, is the number that will be the one that we do. We keep the monitoring, and then probably we have to do another meeting," he said.
The coronavirus outbreak has put paid to the group's plan to begin unwinding the agreement, he said. "The initial plan was that 2020 was supposed to be the year that ... we can relax a little bit. But corona[virus] changed everything. There is not a question about ending it [now]," Obiang Lima said.
The output restraint deal is likely to be extended for at least another year, he said. But he did not specify if this refers to existing cuts or to a stricter production regime.
