Oil cartel Opec and allied producers, including Russia (Opec+) has warned of a “precarious” outlook as a resurgent coronavirus pandemic hurts oil demand, dropping further hints about a potential change of policy.
Opec+ is facing a slowdown in demand. Consumption isn’t likely to return to prior COVID-19 levels for at least a couple of years, particularly for jet fuel, trading houses such as Vitol and Trafigura have predicted.
Without tipping their hand, Saudi Arabia and Russia showed their unity at an Opec+ joint ministerial monitoring committee (JMMC) meeting on Monday. Their top oil officials, Prince Abdulaziz bin Salman and Alexander Novak, offered gloomy views. The Saudi minister warned of an “uncertain” outlook for demand and called on Opec+ to be “proactive.”
The admission has been a long time coming and is based on factors such as the COVID-19 pandemic rattling oil demand for years to come, as well as the growing share of non-oil sources in the global energy consumption mix, facilitated by countries scrambling to meet their environmental sustainability goals.
The rising cases of COVID-19 in the U.S. and Europe, in particular, have led to the potential for more economic shutdowns, which can impede demand for energy.
