With the most recent round of coronavirus-inspired lockdowns in various parts of the world, OPEC may face its biggest challenge yet: cutting even more production. Would the cartel and its members survive such a decision?
OPEC originally planned to relax the current round of production cuts starting in January. And for now, that plan still stands. But there has been talk among OPEC members and analysts that it could waylay that plan, extending the cuts beyond January 2021 to some indefinite future date.
The reason for the possible extension of the current round of cuts is OPEC's view on oil demand, upon which all plans—budgets, production plans, austerity measures—hinge.
And if the new round of lockdowns in various parts of the world are any indication of future oil demand—and oh, are they ever—OPEC must seriously be considering the possibility that its plans to relax the production cuts should be scrapped.
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WNU Editor: Europe is under lockdown. Covid-19 coronavirus cases are accelerating in the U.S.. This is going to continue well into next year. I would also not be surprised that the first act in a Biden administration will be to institute nationwide lockdowns and restrictions. OPEC will have no choice but to cut production. If not. Oil prices will collapse to amounts that will range from $10 to $20 a barrel.
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