A study by the Organization of Arab Petroleum Exporting Countries (OAPEC) stated that the rate of monthly oil and natural gas production has witnessed an escalation from the beginning of 2020 until April, then it began to decline, and the decline in prices led OPEC to take the initiative to take a very important decision whereby it adopted a reduction in its production. Of oil in alliance with a group of 10 non-OPEC countries, in what was known as the "OPEC Plus" (+ OPEC) group, which developed a plan to reduce production by 9.7 million barrels per day starting from May 1 to June 30, with a pledge from the United States to reduce production By about 300 thousand barrels per day, so that the total reduction in production is 10 million barrels per day, and that the reduction is adjusted to 8 million barrels per day during the second half of 2020 from July 1 to December 31, then the reduction will be reduced to 6 million barrels per day for a period of 16 months that begins From January 1, 2021, to April 30, 2022.
The study showed that the plan to reduce oil production contributed to limiting the decline in prices, and even to improving them again, as West Texas Intermediate crude prices jumped to $ 28.6 in May, while they reached $ 47 per barrel in December 2020, and the annual average price of crude was reached. Brent $ 39.2 / barrel in 2020, compared to about $ 57 per barrel in 2019, a decrease of nearly 31%.
The study titled “Comparing some monthly indicators in the petroleum industry between 2019-2020” added that the easing of closure measures in the face of Covid-19 contributed to the gradual increase in oil demand, especially in the second half of 2020, with positive results emerging. Regarding the discovery of a vaccine against the epidemic, although there was some decline due to what was known as the second wave of the Covid-19 epidemic, but this decline remained much less than the decline during the first wave of the epidemic, and the year 2020 closed with a total decline in crude oil production by about 6.6% compared to 2019, a decline much less than expected, which allows us to say that the petroleum industry was able to quickly overcome a large part of the crisis.
The study indicated that, at the level of production of natural gas liquids, it was affected by its role in the first half of 2020, but it increased on an annual basis by about 1%, from 12.3 million barrels per day in 2019 to 12.4 million barrels per day in 2020. The reasons for this are that natural gas liquids were not included in the OPEC agreement to reduce production because they are basically not included in the production quotas of the member states.
The study indicated that although the annual statistics indicate a marked decline in the most important indicators such as the number of rigs, production rates, prices, etc., the monthly changes painted a clearer picture, and indicated that the second half of 2020 witnessed a gradual improvement of these indicators, perhaps due to the easing of the embargo measures and optimism. With the production of several vaccines for the virus in various countries of the world, and despite the emergence of a second wave of infections in the world in the end of 2020, it is clear that its impact was not the same as the impact of the spread of the epidemic in the beginning of 2020, and many indications indicate that the petroleum industry despite its faltering steps In the first half of 2020, however, the news of the discovery of a vaccine for the Covid-19 virus in the second half of the year had an important role in easing the measures taken by countries to limit the spread of the epidemic, which contributed to the gradual recovery of demand.
I continued, just as the agreement to reduce production by OPEC countries and its allies (OPEC) played a noticeable role in improving prices, but this does not mean that the petroleum industry has fully recovered, as the world still lives under the umbrella of fear of the effects of the epidemic, and the easing of travel bans or embargoes It has not completely disappeared, but the picture looks much less pessimistic than what was common in the first half of last year.
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