The measures likely to be taken by the organisation include a possible reversal of a planned output increase from January 2021

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OPEC headquarters in Vienna, Austria. (Credit: DALIBRI/Wikipedia.org)

The Organisation of the Petroleum Exporting Countries (OPEC) and its allies (collectively called OPEC+) have pledged to take steps to support the oil market amid weak demand resulting from a second wave of the coronavirus across various countries.

The second wave of the pandemic and an earlier plan of the member nations to increase oil production from 2021 is expected to further weaken prices of the commodity, reported Reuters.

During a meeting of OPEC+’s Joint Ministerial Monitoring Committee (JMMC) Committee, it was noted that the pace of economic recovery has gone down because of a spike in Covid-19 cases across major economies, especially in the Americas, Europe, and Asia.

According to the organisation, spot crude prices settled considerably lower in September following gains for four consecutive months.

The OPEC Reference Basket (ORB) in September came down by $3.65, or 8.1% month-over-month, to $41.54 per barrel, while the year-to-date yielded an average of $40.62/b, as per its monthly oil market report.

The organisation said that the world oil demand is currently projected to go down by 9.5 millions of barrels per day (mb/d) year-over-year to reach a level of 90.3mb/d. This is relatively the same as the assessment made last month, said OPEC.

Saudi Arabia said that there should not be any doubts about OPEC+’s commitment to providing support to the oil market.

Among the measures that could be taken by OPEC+ include a possible reversal of a planned output increase from January 2021 if required, reported the news agency, citing certain sources from producing countries.

Saudi Energy Minister Prince Abdulaziz bin Salman, who is also the Chairman of OPEC+ JMMC, said: “This group has shown, especially in this year, that it has the flexibility to adapt to changing circumstances when required. We will not dodge our responsibilities in this regard.

“Nobody in the market should be in any doubt as to our commitment and our intent.”

Conformity level of OPEC+ nations on production cuts goes up to 102%

The JMMC said that the participating OPEC and non-OPEC nations showed a conformity level at 102% for the agreed production cuts announced in June 2020.

As per the agreement, the participating countries were asked to slash their oil production by 9.7 million barrels per day to achieve a production target of 7.7 million barrels per day.

The organisation is due to slash the cuts by an additional two million bpd in January 2021, reported Reuters.