We are not here to curse the darkness but to light a candle that can guide us through the darkness

OPEC Bulletin Commentary – December 2020-January 2021

And so, after 12, grueling, relentless months, the year 2020 drew to a close. The world will never be the same for it. Unquestionably, it was the most trying year in the majority of our lifetimes. There has simply been too much sorrow, heartache, loss and suffering. Humanity breathes a collective sigh of relief the year is over and hopes for better fortunes in 2021.

No country or sector of the global economy has been spared. This has been very apparent with the energy industry, particularly the oil industry. Some commentators have even concluded that the oil sector may have been more severely affected than any other by the pandemic. Industry veterans have seen things in 2020 they never could have imagined or compared it with. There are no parallels to the events of ‘Black Monday’ on April 20, 2020.

Yet, as OPEC and the ‘Declaration of Cooperation’ (DoC) participating countries have shown, this was not a time for despair. Indeed, the oft-quoted famous phrase seemed particularly pertinent to their efforts:

We are not here to curse the darkness, but to light a candle that can guide us through the darkness to a safe and sane future.

Ministers discussed at the 180th Meeting of the OPEC Conference, held on November 30 and December 1, 2020, and the 12th OPEC and non-OPEC Ministerial Meeting, held on December 3, 2020, how they could continue to act as a light for an industry buffeted by the impact of COVID-19. Their actions proved essential in reviving the fortunes of the market.

The 12th ONOMM made a number of critical decisions. In light of the current oil market fundamentals and outlook for 2021, the participating countries reconfirmed the existing commitment under the DoC decision from April 12, 2020, then amended in June and September 2020, to gradually return 2 million barrels/day (m b/d), given consideration to market conditions. They also decided to voluntary adjust production by 500,000 b/d from 7.7m b/d to 7.2m b/d beginning in January 2021. Furthermore, participating countries agreed to hold monthly OPEC and non-OPEC ministerial meetings starting January 2021 to assess market conditions and decide on production adjustments for the following month; and extended the compensation mechanism to the end of March 2021.

The year 2021 began with careful analysis and deliberations at the 13th ONOMM, held over January 4 and 5. Reflecting on the year that had just passed, the Meeting noted the “unprecedented events of 2020 and shocking impact of the COVID-19 pandemic on the world economy and markets.”

At the press conference following the Meeting, the Kingdom of Saudi Arabia, in an act of extraordinary goodwill, announced a further unilateral adjustment of 1 m b/d for the months of February and March 2021. This noble and selfless act served to fulfil the purpose, which HRH Prince Abdul Aziz Bin Salman Al Saud, Minister of Energy and Chairman of the ONOMM, explained was taken with the purpose of “supporting our economy, the economy of our colleagues in OPEC+ countries, to support the global economy.”

Prince Abdul Aziz added, “We take it that this gesture of goodwill will not be in vain. It will help and support our friends and colleagues to continue this unprecedented commitment of achieving 100 per cent conformity and also lend support to those countries that are still trailing with their compensation.”

Alexander Novak, Deputy Prime Minister of the Russian Federation and co-Chair of the ONOMM said that the additional voluntary production adjustment was “a great New Year present to the whole industry and great contribution by the Kingdom of Saudi Arabia for speedier and more consistent inventory draws, which will help to stabilize the market faster.”

The 12th and 13th ONOMM’s marked the end of the fourth year and beginning of the fifth year of the ‘Declaration of Cooperation’. The year 2020 saw DoC participating countries faced with their greatest challenge to date. They proved themselves able and willing to meet the adversity head on. Saudi Arabia has further solidified this achievement, with its inspiring leadership role. With this act, the year 2021 has gotten off to a bright a start; a harbinger for better things ahead.