OPEC+ may cut oil output further at meeting this week

Oil-producing countries are unhappy with the 20% drop in prices since late September, and may consider further supply cuts.

Reuters quoted a source close to the matter as saying that they expected the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to extend the policy of cutting, or even reduce supply further, this week to support oil prices. At the close of the session on November 27, Brent crude oil prices were close to 80 USD a barrel, down from nearly 98 USD at the end of September.

OPEC+ will meet on November 30. The meeting was originally scheduled for November 26. However, the event was postponed because African members did not agree with the proposed production level.

However, Reuters sources said that in the past few days, these countries have gradually made concessions. On X, Kuwait's Oil Ministry pledged to comply with OPEC decisions, especially those related to production quotas.

After a series of cuts from the end of 2022, Saudi Arabia, Russia and other members of OPEC+ have pledged to withdraw 5.16 million barrels of oil per day from the market, equivalent to 5% of global oil demand. This figure includes 3.66 million barrels from OPEC+ countries and voluntary reductions by Saudi Arabia and Russia.

Reuters quoted an OPEC+ source as saying that the current cuts may not be enough. "OPEC+ is not happy to see increasing market volatility ahead of the next meeting, although the fundamentals remain strong. Ministers may discuss what further policies are needed to stabilize the trend," the source said.

Many OPEC+ members now rely on oil as a major source of government revenue. However, crude oil prices have been falling steadily recently.

Goldman Sachs this week forecast that both Saudi Arabia and Russia will continue to voluntarily reduce production until at least the end of the first quarter of 2024. Analysts at ING agreed, saying otherwise “the pressure on the market will be even greater.”

In mid-month, the International Energy Agency (IEA) lowered its forecast for oil demand next year. They also warned that the market is likely to be oversupplied in the first quarter of 2024.

Ha Thu (according to Reuters)

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