The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, are currently considering deepening their oil production cuts. This development comes as the group’s policy meeting has been rescheduled to this Thursday, following a postponement due to disagreements over quotas among some producers. According to an insider from OPEC+, there is a possibility that the meeting will explore options for a “collective further reduction” in oil production, although specific details were not disclosed.
Analysts have been closely monitoring the situation and several have expressed expectations that OPEC+ might extend or even increase the scale of their supply cuts into the following year. This move is seen as a strategy to bolster oil prices, which, as of Monday, were hovering just above $80 a barrel. This figure shows a notable decrease from the near $98 per barrel seen in late September. Earlier this month, sources from OPEC+ indicated that the group was contemplating additional reductions in output.
The decision-making process within OPEC+ involves both the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia. The group’s online meetings to decide on oil output levels are set to commence at 1300 GMT this Thursday, according to a draft agenda obtained by Reuters. Notably, this meeting was initially scheduled for November 26 but was delayed due to a dispute over production levels for African producers. Recent reports suggest that the group is now nearing a compromise on this issue.
A significant aspect of these discussions is the commitment of OPEC member countries to the group’s decisions, particularly those pertaining to market quotas and oil production. The Kuwaiti Oil Ministry, representing one of the OPEC members, affirmed its dedication to any decisions made by OPEC in a recent social media post. The upcoming meeting on Thursday will begin with discussions by ministers on an advisory panel known as the Joint Ministerial Monitoring Committee at 1300 GMT. This will be followed by a gathering of the full policy-making group of OPEC+ ministers at 1400 GMT, as per the agenda.
The OPEC+ alliance, which includes key players such as Saudi Arabia and Russia, has already committed to significant oil output cuts totaling about 5 million barrels per day (bpd). This represents approximately 5% of the daily global demand. These cuts began in a series of steps starting in late 2022 and include Saudi Arabia’s additional voluntary production cut of 1 million bpd, which is scheduled to expire at the end of December. Russia has also agreed to reduce its exports by 300,000 bpd until the end of the year.
The implications of these decisions are far-reaching, impacting global oil markets and the economies of producing countries. The outcome of the OPEC+ meeting is eagerly awaited by industry stakeholders and analysts, as it will provide crucial insights into the future direction of oil production and prices. The potential deepening of cuts could further tighten the market, potentially leading to higher oil prices, which would have a ripple effect across various sectors of the global economy.
As the meeting approaches, all eyes are on OPEC+ to see how they navigate the complex interplay of market forces, geopolitical considerations, and the needs of their respective countries. The decisions made in this meeting could set the tone for the oil market in the coming year, influencing not just the member countries but also the global energy landscape.
