Brief high-level remarks by OPEC Secretary General

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the 11th OPEC and non-OPEC Ministerial Meeting, 6 June 2020, via videoconference.

Excellencies,

There have been almost two months since the historic 9th and 10th (Extraordinary) OPEC and non-OPEC Ministerial Meetings on 9 and 12 April.  Looking back on this period, it has perhaps felt less like two months, and more like two years. 

It has been a rollercoaster ride, but what has been consistent over this period is the commitment of participants in the Declaration of Cooperation (DoC) to the voluntary production adjustments, the largest and longest in the history of OPEC, OPEC+ and the oil industry, and to rebalancing and stabilizing the market.

The month of April was a ghastly one for the world, the global economy and the oil market, despite being positively punctuated by the DoC production adjustments.

The COVID-19 pandemic was at its height, with widespread economic lockdowns, businesses shut in, flights grounded and many of the world’s population confined to their homes to help contain this unprecedented global health crisis.  A paralysis had gripped continents, nations, industries and people.

As we all bore witness too, the effects on the oil market were unparalleled.  Large-scale oil demand destruction, at a level never seen before; a massive supply and demand imbalance; and, global storage capacity filling quickly.  Perhaps the epiphany of this was April 20, or what some have called ‘Bloody Monday’, when the WTI May contract went negative, ending the day at close to minus $40/b.

The panic this day caused was palpable.  It left CEOs, oil companies, traders and analysts open-mouthed; how could this have happened?  It left us all searching for answers.  There are a number of possible explanations, but in reality it all came down to the huge mismatch in supply and demand fundamentals.

However, what has been evident in the period since the start of May, when the 9.7 mb/d DoC production adjustments kicked in, has been the growing, albeit, tentative signs of recovery. 

This recovery has also been ably aided by the welcome additional adjustments from Saudi Arabia (1 mb/d); the UAE (100 tb/d); Kuwait (80 tb/d); and Oman (10-15 tb/d).  This display of leadership is of immense value to the DoC.  Moreover, we have also seen announcements of voluntary adjustments from several countries, such as Norway and Canada, oil company statements revising downward their production plans and shutting in supply, and, of course, many economies emerging from lockdowns.

Here, I should also like to recall the positive statements we have received from consumers, not only through the G20 Extraordinary Energy Ministers Meeting that sandwiched our two Ministerial Meetings in March, but also in various Secretariat briefings we have held with China, India and the European Union.

The very early green shoots of a revival are evident; we do hope that we have turned a corner.  Nevertheless, global oil demand is still expected to shrink by more than 17 mb/d in the 2Q20, and while it is expected to ease in the second half of the year, for the whole of 2020 the contraction is still forecast to be around 9.1 mb/d.  This will bring global oil demand to 90.6 mb/d; back to levels last seen before the 2014-2016 market downturn.

It underscores the fact that we cannot rest on our laurels.  We need to maintain the laser focus on helping bring supply and demand back into balance and providing a more stable market in the coming months.  This is not the time to stand back and admire what we have achieved thus far; we do not want to jeopardize these successes in any way.

We also need to appreciate that the waters remain choppy, and as we navigate our journey it will not be plain sailing, but we have to remain resolute.  It is in the interests of us all.  It was the legendary Russian poet, Bulat Okudzhava, that once said:

 “Let us join hands my dear friends. We won’t get lost if we are together.”

Together we can ensure that our hard-earned achievements are not compromised or lost.

Following on from the 179th Meeting of the OPEC Conference earlier today, it is vital that we look to lay out possible pathways for the coming months, the remainder of 2020 and into 2021.  This will enable all DoC partners to remain proactive, focus on 100% conformity, and help further rebalance fundamentals and reduce volatility in the oil market.

Before I conclude I think it is important to once again thank HRH Prince Abdul Aziz Bin Salman and HE Alexander Novak, who as co-Chairs at the two April Extraordinary Ministerial Meetings, ably and astutely guided us to the historic decisions.  As co-Chairs today, we look forward to their continued wise guidance and forthright commitment to the DoC.

This catholic marriage between OPEC and our non-OPEC partners remains sacrosanct!

With that I would like to pass the floor to…

Thank you.

HE Mohammad Sanusi Barkindo, OPEC Secretary General

HE Mohammad Sanusi Barkindo, OPEC Secretary General