OPEC+ (plus) solidarity is threatened into collapse (3/3)

 

(Japanese Version)

(Arabic Version)

Jan, 2021

 

3. Future outlook

The current problem is when oil demand will recover. The vaccination of COVID-19 has started and it is expected that the number of infected people will decrease. But the third wave of epidemic spreads around the world and the variant viruses appear one after another. It is difficult to predict when COVID-19 will finally run out. It is also unknown that when and how much demand will come back by Chinese economic recovery.

 

The world economic recovery has been directly linked to the increase in demand for petroleum. But the energy source is changing rapidly from petroleum to renewable energy. Major oil companies such as BP are going to depart from oil. The future of oil is not always bright.

 

Looking at OPEC+, it can be said that the honeymoon between Saudi Arabia and Russia is over. In order to avoid the collapse of the market, Saudi Arabia announced a voluntary production cut of 1 million B/D in February and March. But the financial condition of the Kingdom is steadily deteriorating. Saudi Arabia has enough power to keep a significant production cut for a long period.

 

OPEC+ might be transformed from a producers’ cartel that dominates the energy market into an oil-producers’ friendship club. The golden age of Saudi Arabia is almost over.

 

End

 

 

By Areha Kazuya

E-mail: Arehakazuya1@gmail.com