Algiers and its influence on the oil outlook

OPEC Bulletin Commentary – September-October 2021

Each year the release of the World Oil Outlook (WOO) is a signature event on the OPEC calendar, drawing the attention of top energy analysists, market-watchers and journalists keen to mine one of the foremost publications of its kind.

This year’s launch of the WOO’s 15th edition, on September 28, was no different. Besides providing the OPEC Secretariat’s in-depth analysis of the impacts of the COVID-19 pandemic, it contains much-anticipated medium- and long-term projections for the global oil and gas industry. This year’s edition broke new ground with a chapter focused on India, the country that is expected to be the largest contributor to incremental global oil demand for the foreseeable future.

The launch of the WOO on September 28 coincided with another significant milestone. On that day in 2016, the 170th (Extraordinary) Meeting of the OPEC Conference established a High-Level Committee to develop a framework for consultations between OPEC and non-OPEC oil-producing countries. The decision came about in response to the acute imbalances that had roiled the oil market for two years.

The historic decisions of the 170th OPEC Conference, meeting in Algiers, created the impetus for the key outcomes of the 171st Meeting of the OPEC Conference in Vienna a few weeks later, on November 30. These efforts culminated in the signing of the landmark ‘Declaration of Cooperation’ (DoC) framework by OPEC and ten non-OPEC oil-producing countries on December 10, 2016.

“The series of events that took place five years ago, starting with the ‘Algiers Accord’ and leading to the signing of the DoC, represent pivotal moments in the history of OPEC,” Mohammad Sanusi Barkindo, OPEC Secretary General, said on the fifth anniversary of the meeting in Algiers. “Though the visionary leaders at the time could not foresee a challenge as monumental as the COVID-19 pandemic, a large part of the oil market stabilization that has occurred over the past 18 months can be attributed to the historic actions undertaken by the countries in the DoC.

“Together,” he added, “we have averted a far deeper market crisis, helped restore order to the global oil market, and have provided a platform for recovery. We would not be where we are today were it not for the key decisions taken in Algiers in September 2016 that helped pave the way for this historic level of cooperation by OPEC and non-OPEC oil-producing countries.”

The year 2021 may well be remembered as a time of recovery and renewed potential following one of the most tumultuous episodes in the history of oil. The DoC’s bold and decisive actions that began in April 2020 have supported the draw-down of inventory levels, helped restore stability and boosted market confidence. These efforts have not gone unnoticed by policymakers, energy analysts and some of the biggest names in the international oil industry. The CEO of one oil major called the OPEC-led efforts ‘brilliant’, while another credited his company’s rebound this year in part to the DoC’s actions.

Recognizing the need for continued diligence, the OPEC and non-OPEC participants, meeting in July this year, extended their current efforts beyond the original April 2022 target until the end of 2022. They also set the stage to support the economic recovery through upward production adjustments of 400,000 b/d, a decision reaffirmed at the September and October Ministerial Meetings.

Without such efforts to steer the oil market through the pandemic, it is difficult to see how the oil industry could regain lost ground and keep pace with the expected 28 per cent growth in primary energy demand and doubling of the global economy between 2020 and 2045. As the 15th edition of the WOO points out, the historic response to the pandemic-induced market slump “was a sign not only of the commitment, motivation and dedication of OPEC and the DoC partners in attending to the short term, but in focusing on the medium and long term too.”

Against this backdrop, the developments in Algiers on September 28, 2016, have earned a well-deserved place in the history books. Yet the foundation for these achievements was actually laid decades ago, on September 14, 1960, when OPEC was founded at the Al-Shaab Hall in Baghdad. Today, the timeless value of the Organization is reflected in its tireless pursuit of cooperation to support the sustainable stability of a commodity that will remain essential to the world’s energy needs for decades to come.

OPEC Bulletin September-October 2021

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