Developing nations’ oil and gas income will fall by 50% to 85% this year to a more than two-decade low if current market conditions persist, the International Energy Agency (IEA) and OPEC said in a rare joint statement on March 16, citing recent IEA analysis.
This is likely to have “major social and economic consequences”, notably for public sector spending in vital areas like healthcare and education, the statement from IEA director Fatih Birol and OPEC secretary-general Mohammad Barkindo said.
Oil prices slid below $30 a barrel on March 16 as the global spread of coronavirus became more entrenched, leading to lockdowns as the global economy appeared to be headed toward certain recession.
The oil price rout was exacerbated by the collapse of an alliance between OPEC and allies led by Russia, which had been withholding production from the market.
The statement did not expressly mention the alliance’s leaders Saudi Arabia and Russia, which have started a price war for market share, but called for market stability.
OPEC, Russia and others, a group known as OPEC+, hold their wider talks on Dec. 1, after informal discussions of key ministers on Nov. 29 had failed to reach a consensus on oil output cuts.
After consultations on Nov. 29 failed to reach agreement, sources said Russia suggested a possibility for OPEC+ to start increasing output by 500,000 bbl/d each month from January.
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 Nov. 29 and ahead of crucial meetings on Nov. 30 and Dec. 1, four OPEC+ sources told Reuters.