[Joint Press Release] The International Energy Agency (IEA), the International Energy Forum (IEF) and the Organization of the Petroleum Exporting Countries (OPEC) met today via videoconference for the 7th Joint IEA-IEF-OPEC Workshop on the Interactions between Physical and Financial Energy Markets.
The high-level Workshop was co-chaired by OPEC Secretary General, HE Mr. Mohammad Sanusi Barkindo, together with Mr. Joseph McMonigle Secretary General of the IEF, and Keisuke Sadamori, Director of the Office for Energy Markets and Security at the IEA. The Workshop had over 120 participants.
In his opening remarks, HE Mr. Barkindo said "the importance of this dialogue has been brought home to all of us in 2020. The effects of the COVID-19 pandemic on the oil market have been unparalleled."
Addressing participants, he also highlighted how the day of 20 April 2020 underscored the relationship between physical and financial markets, when the price of WTI in the futures market plunged into negative territory. He said the day has been described as "scary and visceral" and noted that actions taken by participants in the Declaration of Cooperation have "been pivotal in reducing volatility and bringing back some semblance of stability to the market."
Mr. McMonigle said that complex physical and financial energy market dynamics are better understood, better regulated, and more transparent since we launched our dialogue in response to the Global Financial Crisis a decade ago. "As the COVID-19 pandemic shows, unforeseen external shocks will continue to surprise. The pandemic calls for dialogue on physical and financial energy market links focused on energy stability, to broaden perspectives on investment, energy access, and climate neutral growth"
Mr. Sadamori noted that Covid-19 has disrupted energy markets in unprecedented ways and it will have a long-lasting impact. He said that since the negative price we saw in April for WTI, the oil market has started to re-balance and since mid-June there has been price stability. Stability is exactly what we need; it is a chance to draw breath and adapt to the Covid-19 world.
Sadamori added that "at the IEA, we remain committed to improving dialogue and we are working more closely than ever with our colleagues in OPEC and the IEF in trying to understand the extraordinary energy markets we are seeing in 2020".
Discussions during the videoconference were structured into three sessions, all of which covered the impact of the COVID-19 pandemic.
The first session was on the 'Impact of COVID-19 on the global economy and commodity markets', which provided a high-level overview of how the knock-on impacts of the pandemic has ripped through the global economy and commodity markets. The second session covered the 'Global oil industry investment patterns and dynamics in light of COVID-19 and the energy transition'. And the third session looked at 'Exchange Traded Funds and the futures markets: lessons from recent oil market volatility'.
The Joint Workshop is one part of the trilateral work programme established by the three organizations and endorsed by energy ministers at the 12th International Energy Forum in Cancún, Mexico, in March 2010. Since then, the joint IEA-IEF-OPEC meetings covering the evolving inter-linkages between physical and financial energy markets have developed into a unique, high-level dialogue event that brings together a diverse range of market participants to discuss issues that are not addressed in other high-level fora.
To encourage open and informative discussion, the Workshop was held under the Chatham House Rule.
At the conclusion of today’s meeting, the three organizers thanked participants for their engaging and frank discussions on such complex and evolving issues, and looked forward to convening the next Joint Workshop in 2021.