ALBAWABA – As oil prices have fallen 20 percent since late September, OPEC+ is considering more oil cuts to be decided at the next meeting of the Organization of Petroleum Exporting Countries and its allies (OPEC+) later this month, Reuters reported Friday.
From $98 back in September, marking a record high in 2023, Brent oil prices have slid to around $79, with concerns about demand in China and the United States (US) persistent still.
Late in 2022, Saudi Arabia, Russia and other members of OPEC+ already pledged total oil output cuts of 5.16 million barrels per day, or about 5 percent of daily global demand.
The oil cuts were intended to stabilize the market and bolster oil prices. The cuts include 3.66 million bpd by OPEC+ and additional voluntary cuts by Saudi Arabia and Russia.
However, one unnamed OPEC+ source told Reuters the existing curbs might be not enough and the group will likely analyse if more could be implemented when it meets. Two other OPEC+ sources said deeper cuts could be discussed in the upcoming meeting.
"It is not pleasant to see that market volatility is greater ahead of the next meeting while fundamentals overall remain solid," one of the unnamed OPEC+ sources said. "Ministers are likely to express some thoughts on what to do more, to secure a stable trend."
Saudi Arabia and Russia volunteered additional oil cuts earlier in 2023 to further bolster oil prices - Shutterstock
Ministers from OPEC+ meet on November 26, Reuters confirmed.
The group already has a plan to curb supplies by 3.66 million bpd into 2024 made during its last meeting in June, but as to the additional cuts, it remains to be seen.
OPEC and the Saudi Energy Ministry did not respond to Reuters’ requests for comment on Friday.
Overall, the price drop has deepened this week. Even after OPEC in a monthly report said the oil-market fundamentals remained strong despite "negative sentiment" and stuck to its relatively high 2024 oil demand growth forecast, according to Reuters.
More so, the International Energy Agency, which also updated its outlook this week, has a lower 2024 demand growth forecast and said the market could shift to a surplus in the first quarter.
While three sources said more cuts could be required, two other OPEC+ sources told Reuters it was too early to say whether further cuts will be discussed, while another said he did not think it was likely. "Wait and see", he advised with caution.
Notably, OPEC+ does not have a target for oil prices. But members depend on oil as a primary source of government income. For example, analysts have told Reuters that Saudi Arabia's oil cut extension raises the risk of Saudi economic contraction this year.
