November 30, 2023

The OPEC+ alliance of oil producers will consider additional production cuts for next year to support crude prices in virtual meetings on Thursday, three delegates told Reuters.

A preliminary agreement has been reached for an additional cut of more than 1 million barrels per day (bpd), two OPEC+ source said.

Saudi Arabia, Russia and other members of OPEC+ pump more than 40% of the world’s oil supply, some 43 million bpd.

With Saudi Arabia’s voluntary output cut of 1 million barrels per day (bpd) and a Russian export cut of 300,000 bpd both set to expire at the end of this year, the focus is on plans for 2024.

In total OPEC+ producers are currently holding back about 5 million bpd in production.

Benchmark Brent crude futures were up 1.4% to more than $84 a barrel on Thursday, on track for a third day of gains on expectations of fresh cuts from OPEC+.

Two delegates involved in the discussions said fresh cuts for 2024 could potentially take 1 million to 2 million bpd in production off the market in the first quarter of 2024.

RBC Capital Markets analyst Helima Croft said that Saudi Arabia, which began its additional voluntary 1 million bpd in July, would not want to shoulder additional cuts alone.

“We could envision a scenario where Russia and Saudi Arabia roll over their cut through the first quarter of 2024 and assemble a coalition of the willing individual producers prepared to make voluntary adjustments,” she added.

The focus is on lower output with prices down from near $98 in late September and concerns brewing over weaker economic growth in 2024 and expectations of a supply surplus.

Yet OPEC+ sources this week said discussions had been proving difficult, as evidenced by the group postponing their meeting which was scheduled for Nov. 26.

Plans now call for an OPEC-only ministers virtual meeting on Thursday at 1100 GMT and a wider OPEC+ meeting at 1400 GMT.

Sources said the delay was sparked by disagreement over output quotas for African producers, a matter they said had largely been resolved.

The OPEC+ meeting coincides with the opening of the United Nations’ COP28 climate summit being hosted by OPEC member the United Arab Emirates.

REUTERS