For the first time since early January 2020, Brent crude futures rose, reaching record levels, to trade at $61.2 a barrel, when before the outbreak of the Corona pandemic it hit $ 62.46, while West Texas Intermediate crude oil prices rose, trading at $58.5 a barrel.
Recently, oil markets continue to restore their balance with the rise in prices supported by three main factors. The first is the voluntary reduction by the Kingdom of its production by one million barrels during this February and next month in March.
The second factor is the start of vaccinations to prevent the Coronavirus, in parallel with the OPEC + agreement to extend the agreement of reducing production until the end of the year.
Early last May, the historic agreement was reached between the countries of the “OPEC +” alliance to reduce production by 9.7 million barrels per day for two months, then reduce production to eight million barrels per day, starting from July until the end of 2020. Subsequently, production is to be reduced by two million barrels per day to six million barrels per day, starting from the beginning of 2021 until April of next year 2022.
The recent oil increase came after sharp declines as a result of the accumulation of global stocks and a significant reduction in demand due to the repercussions of the Coronavirus, which led to the closure of the world’s borders.
Last April, for the first time in history the listed price of a barrel on the New York market plummeted to below zero.
Recently, the OPEC Plus Ministerial Committee, headed by Prince Abdulaziz bin Salman, Minister of Energy as Chairman, and Russian Deputy Prime Minister Alexander Novak as Co-Chair, reviewed the monthly report prepared by the Joint Technical Committee.
The report included oil production data for the month of December and the committee welcomed the performance. The positive sign for participating countries, where the percentage of total commitment to the original adjustments in production was 101%, thereby reinforcing the continued high compliance of participating countries.
The Joint Ministerial Committee to Monitor Production Reduction in the OPEC Plus Alliance praised, with much appreciation, the amendment of the current voluntary production carried out by the Kingdom of Saudi Arabia for a period of two months. Furthermore the committee stressed that this decision embodies the pioneering role of the Kingdom, and confirms the need for a proactive and flexible approach adopted by all members who declared cooperation.
The coalition countries have extended their current oil production policy, in an indication of the confidence of the producing countries that their large cuts to supplies will end the negative effects of stocks, despite the climate of uncertainty as the pandemic continues, regarding the prospects for a recovery in demand.