Markets welcomed the cartel's decision to gradually reopen the floodgates of production. But the consensus remains fragile for 2021.

After a postponement from Tuesday to Thursday, the Organization of the Exporting Countries (OPEC) and its allies such as Russia have decided to very gradually reopen the oil floodgates, 500,000 barrels / day more in January, before a new meeting every month to set similar developments in February and March. These talks between energy ministers were initially intended to extend the production reduction of -7.7 million barrels per day (mbd) by three months , instead of reducing it to -5.5 mbd as provided for in the agreement of 10 April. But the sharp rise in prices in November (+27%) with the hope raised by vaccines against Covid-19 has led several countries to question this policy of status quo defended by Saudi Arabia.

The debates have been tense. "The United Arab Emirates (UAE), reprimanded by the Saudis for their non-compliance with the reduction agreement in July, has been keeping its commitments well ever since but insists that the cartel take a hard line against latecomers," says John Hancock, an analyst at Natixis. Despite this compromise to avoid losing market share to the Americans, these problems will continue, with higher prices increasing the interest in not respecting the agreement and increasing exports and revenues. After a decade of growth in U.S. supply, almost all of the expected increase in consumption in 2021 could be offset by the increase in OPEC production. The unity of the cartel, which must deal with the resumption of production in Libya, will remain a key to this fragile balance in a market that requires a sustainable gap between supply and demand to allow a reduction in accumulated stocks.

Between Thursday and Friday, prices gained nearly +2%, around $46.10/barrel for the January 2021 WTI crude contract and $49.10/barrel for the Brent contract, back to their early March levels. supported by a weak dollar, applauded the emergence of a consensus that will likely maintain a slight undersupply in the first quarter," said Giovanni Staunovo, an analyst at UBS. With even a premium on futures contracts further away ("backwardation") as a sign of future easing on inventory costs, even if the increase in the latter linked to the second wave of epidemic is only beginning and could lead to some temporary price decreases.