OPEC members meet to extend oil production cuts

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OPEC

The OPEC oil producers’ club will meet virtually to mull over an extension to production cuts as the coronavirus pandemic continues to weigh on global demand.

Ministers from the cartel will start meeting via video conference hoping that they can turn a page on a disastrous year.

The 13 members to the Organisation of the Petroleum Exporting Countries want to avoid a repeat of the collapse in prices seen in April at the beginning of the pandemic.

On Tuesday they will be joined by their allies, including Russia, who form the OPEC+ grouping.

The common goal of the alliance is to keep afloat a crude market devastated by the Covid-19 pandemic and which is slowly recovering from the depths into which prices plunged at the end of April.

According to the current deal, a cut of 7.7 million barrels per day (bpd) is meant to be eased to 5.8 million bpd in January 2021, but most observers expect this to be extended by between three and six months.

The current deal was reached in April but since then producers have had the second wave of the pandemic to take into account.

Key players within the grouping have hinted in recent weeks that an extension is on the table despite encouraging news from trials for vaccines by pharmaceutical companies like AstraZeneca, Pfizer/BioNTech and Moderna.

The effect of vaccines, however, will play out over the longer term, while OPEC and its allies will be focused on supporting prices in the first and possibly the second quarter of 2021.

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