The JTC, Joint Technical Committee of the OPEC+,
released its data on the eve of the group’s ministerial meeting scheduled on
Tuesday evening at 17:00 at Vienna time.
According to the JTC, the global demand of crude oil
is going up at a steady rate, but the supply will not be able to catch up with
it that could result in a tighter market.
The reason, according to the JTC, is the depletion
of the global crude oil stocks twice as fast as the daily increase in the output
by the OPEC+, began in August for a period of four months; the figures in question
are 825,000 and 400,000 bpd respectively.
Under immense global pressure, the OPEC+ is expected
to reverse the production cuts implemented last year in order to lift the crude
oil price from rock-bottom values; the cuts were substantial.
If they restore the cuts, the JTC of the OPEC+ argues,
there will be a surplus during the early part of 2022 that could prevail
throughout the year – an anxious scenario for the producers.
The numbers are alarmingly staggering: a surplus of
2.5 million bpd!
It is based on an assumption, indeed. The assumption
is that the OPEC+ will restore 6 million bpd that it agreed on to cut in order
to revive the oil price.
This scenario, which some members will find
suicidal, is highly unlikely, given the economic price that the producers
collectively paid when the price of oil crashed in 2020, hitting once at
negative values for the first time ever.
The OPEC+, however, will not be able ignore the
global pressure either, especially at a very difficult time for the global economies,
ranging from the developed to developing world.
In this context, analysts are keen on the outcome of
the latest OPEC+ ministerial meeting where the key decision makers have to walk
the tight rope of the balancing act.
