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OPEC and allies led by Russia have yet to find a consensus on oil output policy for 2021, after an initial round of talks on Sunday and ahead of crucial meetings on Monday and Tuesday, four OPEC+ sources told Reuters.

There was support in delaying the hike but there was no widespread agreement between members. Therefore, as it currently stands, output will be increased by 1.9m barrels a day in January.

key notes

”OPEC+, a grouping comprising members of the of Organization of the Petroleum Exporting Countries, plus Russia and others, had been due to ease production cuts from January 2021, but a second coronavirus wave has reduced demand for fuel around the world.”

”OPEC+ is now considering rolling over existing cuts of 7.7 million barrels per day, or around 8% of global demand, into the first months of 2021, sources have said.”

”Preliminary consultations on Sunday between the key ministers, including from OPEC’s leader Saudi Arabia and Russia, had not reached a compromise on the duration of the rollover.”

”Sources have said talks were now focusing on extending cuts by three to four months, or on a gradual increase in output. Ideas of deeper cuts or a six-month rollover were much less likely, the sources said.”

“There is no consensus as yet,” one of the four sources said.

A second source said: “There are many different ideas on the table… Also, a gradual increase (in production).”

The main meeting was expected to begin at 1300 GMT on Monday.

Market implications

It is ‘wait-and-see-mode’ for oil markets in anticipation of the continuation of talks this week.

”Brent spreads narrowly moved into backwardation, implying the market has discounted the near-term deficits that are likely to materialize with an OPEC+ tapering delay, combined with a continued recovery in demand. This fits well with our expectations, suggesting that the market has fully discounted a likely OPEC+ tapering delay,” analysts at TD Securities noted last week ahead of the meetings.