Earlier in 2020, OPEC decided to cut the world oil supply due to the low demand during the pandemic, and planned to increase it in January of 2021. Now, in fear of a second wave of the pandemic, Algeria is supportive of maintaining the cuts and deferring the planned increase in output. Russia, on the other hand, wants to increase supply again at the start of 2021. Algeria holds the presidency in OPEC, and Russia is the leader of OPEC and allies. OPEC will continue to have monthly meetings regarding the market conditions, but President Putin has the final word on the decision.
Russia wants to increase oil outputs; but with that option, there is a risk that prices will fall and there will be heavy losses in the market. If OPEC controls the production and cuts their oil supply, they can control the stability of the market. By keeping the prices stable, all the members will be able to keep their economies afloat. Each member’s economy heavily relies on oil and gas. They need revenue to keep their governments functioning and bring in a steady supply of goods and services to their populations. If the prices drop continuously, the instability in the market can also cause instability in politics. Algeria has already been having many protests over dissatisfaction with their government. They support the supply cuts, because they lessen the risk of losing revenue.
Since OPEC is an IGO, it’s focus is mainly on the stability of the economy for each member. They facilitate the work of keeping the energy market stable by having their members’ governments decide on policies and prices together. They will continue to hold meetings to decide what the best move is for the energy market in 2021. If the second wave of the pandemic impacts the demand for oil as badly as the first one did, then OPEC may have to keep deferring their output increase until other economies can recover. The Middle East is also an important market for America and Europe, and if their economies crash due to lack of revenue from oil, the rest of the world would also lose a major source of income.