The price of Brent crude suffered a decline on Monday, slipping from a record high of $53.30 to $51.24. The market had seen the price of the commodity improve after OPEC and its allies reached an agreement to cut production levels.
OPEC and OPEC + held a meeting on Monday, however, there was no resolution on output levels for February. The meeting is expected to continue on Tuesday.
The price slumped despite expectations that OPEC+ would refrain from increasing output next month and optimism over a vaccine-driven economic recovery, according to Reuters.
There are indications that an increase in output from February would not fall through, as members of OPEC+ were against inreasing output level, at their meeting on Sunday.
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Members of OPEC+ raised their output level by 500,000 barrels daily in January, however, they question the rationale for a further increase from February amidst the rise in the COVID-19 pandemic.
The group plans to gradually raise output until it reaches 2 million barrels daily production level. The decision was reached in December 2020, with the takeoff month being January 2021.
OPEC+ producers reduced output to eliminate the glut on the market thereby helping to improve the price of the commodity, in wake of the COVID-19 pandemic.
On Sunday, OPEC Secretary-General, Mohammad Barkindo, warned OPEC+ experts of downside risks facing the oil market.
On Monday, Saudi Energy Minister, Prince Abdulaziz bin Salman, said OPEC+ should be vigilant and cautious despite a generally optimistic market environment as demand for fuels remained fragile and the new variant of coronavirus was unpredictable.
“In many parts of the world, where infection rates have increased worryingly, a new wave of lockdowns and restrictions are being put in place, which will inevitably impact the rate of economic recovery in those countries,” he said.
