DUBAI: The Organisation of the Petroleum Exporting Countries (Opec) sees a generally positive oil market outlook with last year’s uncertainty easing, but downside risks caused by the pandemic persist, the group’s secretary general and its experts have said.
“We have come a long way from a year ago, ” Opec chief Mohammad Barkindo said. “The days of gross domestic product (GDP) and oil demand figures being in the red because of the pandemic-induced shock appear to be behind us.”
Barkindo was speaking before the meeting of the Joint Technical Committee (JTC), which reviews the oil market for Opec countries, Russia and other allies, a group known as Opec+.
Opec+ ministers will hold a full meeting soon.
The market widely expects them to ease their production cuts, which were the deepest ever, by around 1.5 million barrels per day (bpd), with Opec’s leader, Saudi Arabia, ending its voluntary production cut of one million bpd.
However, a JTC document, which was seen by Reuters, called “for cautious optimism, ” citing “the underlying uncertainties in the physical markets and macro sentiment, including risks from Covid-19 mutations that are still on the rise”.
It also said it believed a recent oil price rally might have been caused more by financial players rather than improvements in physical oil market fundamentals.
Barkindo said Opec expected oil demand in 2021 to grow by 5.8 million bpd to about 96 million bpd.
That compares with about 100 million bpd in 2019, before demand plummeted in 2020 due to the pandemic.
“The encouraging global economic developments and resilient demand in Asia are upside factors, ” he said, although he noted that the downside risks of the continuing pandemic meant there was cause to only be cautiously optimistic.
“Progress on Covid-19 vaccinations continues in many countries, but the current pace shows that many developing countries risk being left behind, ” he added.
According to current estimates, 79.4% of the world’s proven oil reserves are located in Opec member countries, with the bulk of Opec oil reserves in the Middle East, amounting to 64.5% of the Opec total.
Opec member countries have made significant additions to their oil reserves in recent years, for example, by adopting best practices in the industry, realising intensive explorations and enhanced recoveries.
As a result, Opec’s proven oil reserves currently stand at 1,189.80 billion barrels. ─ Reuters