Opec to meet in the shadow of a stalling oil market

A person passes an Opec logo in Vienna, Austria. Picture: REUTERS/LEONARD FOEGER

After reviving crude prices from an unprecedented collapse over the spring, Opec is seeing the recovery stall and fuel demand falter as the deadly pandemic surges again. Prices slipped below $40 a barrel last week for the first time since June. The relapse is a source of acute financial distress for Opec nations, from poorer members such as Nigeria and Venezuela — which need crude prices far above current levels to cover government spending — all the way up to wealthy Gulf monarchies such as Kuwait.

The downturn isn’t yet severe enough for Opec to reimpose the full output cutbacks made in the second quarter, according to Helima Croft, head of commodity strategy at RBC Capital Markets. After tapering the cuts last month from 9.7-million barrels a day to 7.7-million, a sense of inertia means there will be a “high bar” for any new action, she said.

In the meantime, the kingdom will press on with its mission to enforce rigorous implementation of the curbs.

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