The coronavirus pandemic slammed the global economy earlier this year, plunging oil prices into unprecedented negative territory before top exporters Saudi Arabia and Russia agreed to put aside their differences and make common cause to halt the slide.
Ahead of a virtual meeting of OPEC and non-OPEC producers to review the situation, Saudi Oil Minister Abdulaziz bin Salman and his Russian counterpart Alexander Novak hailed what they said were “encouraging” signs of recovering demand.
At the same time, Novak cautioned about the fragility of the market and uncertainties over the outlook even though, up to July, the 13 OPEC members plus the 10 non-OPEC producers had by July implemented 95 percent of the cuts agreed.
“But we cannot stop there, we have to ensure the total respect of the OPEC+ accord,” he said.
“Over the past three months, there has been a significant improvement in the fundamentals of the global oil markets,” said the Saudi energy minister, who is half brother to de facto Saudi ruler, Crown Prince Mohammed bin Salman.
“We see encouraging signs that energy demand is recovering, as economies continue to re-open in many parts of the globe,” he said in opening remarks to the meeting.
“But work still needs to be done and I urge you all not to relax the efforts of the past three months.”
Analysts said they expect little change at the meeting, with producers wanting to keep the cuts in place to support the market after having gone through a devastating price war in March between Saudi Arabia and Russia as the coronavirus pandemic deepened.
Paola Rodriguez Masiu, analyst with the Rystad energy group, said “few surprises are expected today.”