OPEC and its allies began a two-day series of meetings on Saturday that could lead to a further production cut of around one million barrels per day (bpd), sources told Reuters, as the organization faces lower oil prices and potential oversupply.
OPEC+, which brings together the Organization of the Petroleum Exporting Countries and their allies led by Russia, produces about 40% of the world’s crude oil.
His decisions therefore have a major impact on oil prices, which have fallen to around 70 dollars a barrel.
According to the sources, the pump cuts are among the options to be discussed on Sunday at the organization’s ministerial meeting at 14:00 (12:00 GMT) in Vienna.
These reductions could amount to one million bpd. OPEC+ already announced new production cuts at the beginning of April for a total volume of about 1.6 million bpd, in addition to a production cut of two million bpd, which was decided last October for the period November 2022. at the end of 2023.
4.5% of global demand
If approved, this further cut would bring the total amount of OPEC+ production cuts to 4.6 million bpd, or 4.5% of global demand.
“This number is premature, we have not yet addressed these issues,” Iraqi Oil Minister Hayan Abdel-Ghani told reporters on Saturday when asked about a possible reduction of one million bpd.
Normally, OPEC+ decisions on production cuts take effect the month after they are announced, but ministers can also agree on later implementation.
Western countries accuse OPEC+ of manipulating crude oil prices and weighing down economic activity through high energy prices.
OPEC officials respond that the monetary easing decided by most Western countries over the past decade has fueled inflation and forced oil-producing countries to act to preserve the value of their main export.
surprising announcement
“We look forward to a decision that will sustainably ensure the balance between supply and demand,” said UAE Energy Minister Suhail Al Mazroui.
The ministers who met at 11, spoke to the press from their hotels in Vienna as OPEC denied access to its headquarters to reporters from Reuters and other media.
The surprise announcement in April caused only a brief spike in the price of a barrel, and questions about the outlook for global growth continued to weigh on prices. The barrel of Brent was exhibited on Friday at 76 dollars.
The International Energy Agency expects global demand to increase further in the second half of 2023, which could support crude oil prices.
However, JP Morgan analysts say there is “simply too much supply” given US shale oil production and higher-than-expected Russian exports.
