Azerbaijan supports OPEC+ decision on daily oil production quotas for April

By Ayya Lmahamad

Azerbaijan supported the OPEC+ agreement on the continuation of existing quotas on daily crude oil production in April, reached at the 14th Ministerial Meeting, Energy Ministry has reported on March 4.

Azerbaijani Energy Minister Parviz Shahbazov stressed that the oil market is relatively balanced now compared to previous periods, but the risks are still not eliminated.

“The current price increase is conditioned by a global conjuncture rather than demand for oil. An increase in oil prices becomes more sustainable when it’s connected with the demand and based on the fundamental factors. In this regard, the optimal step in line with the real situation in the market is to postpone production adjustments,” the minister emphasized.

Shahbazov underlined the importance of the activities of oil producers on the basis of consensus within the Declaration of Cooperation in order to maintain positive dynamics in the oil market under the conditions of uncertainties arising from the pandemic.

According to the new agreement, Azerbaijan’s commitment of 123,000 barrels in April this year will remain unchanged as the first quarter of 2021. The daily crude oil production will be kept at the level of 595,000 barrels. In addition, in April, the daily crude oil production cuts of OPEC+ countries will make up 6.9 million barrels.

In April 2020, OPEC and non-OPEC countries entered into an agreement on the reduction of daily oil production by 9.7 million barrels in May-June and 164,000 barrels for Azerbaijan.

On July 31, the first phase of the OPEC+ agreement of April 12 to reduce daily oil production by 9.7 million barrels was completed.

In the second phase of the agreement, covering the period from August 1 to December 31, the daily production of crude oil in OPEC+ countries will be reduced by 7.7 million barrels, which is 18 percent less than in October 2018.

At the 12th Ministerial Meeting of OPEC and non-OPEC countries, it was decided to reduce the daily production of crude oil by 7.2 million barrels in January 2021 and to regulate the increase in daily production provided, that it does not exceed 0.5 million barrels, through monthly OPEC+ Ministerial Meetings. Azerbaijan’s commitment, according to the new “Declaration on Cooperation”, was 123,000 barrels in January 2021. Thus, in January, Azerbaijan has to increase daily oil production by 8,000 barrels and keep production at the level of 595,000 barrels.

Additionally, at the 13th Ministerial Meeting of the OPEC+ countries on January 5, it was decided to continue the existing quotas on daily crude oil production in February-March.