OPEC+ ministers meet to discuss additional oil output cuts

The OPEC+ alliance of oil producers was set to hold a set of virtual meetings on Thursday to discuss additional production cuts for next year to support the market, three delegates told Reuters.

Saudi Arabia, Russia and other members of OPEC+ pump about 43 million barrels per day (bpd), equating to more than 40% of global supply. They already have about 5 million bpd of production cuts in place.

The size of potential additional cuts have not been decided yet, but two delegates said they ranged from 1 million to 2 million barrels per day (bpd) for the first quarter of 2024.

Oil benchmark Brent crude rose 0.5% to more than US$83 a barrel on Thursday, on track for a third straight day of gains on expectations of further action from OPEC+.

Prices have dropped from near US$98 in late September, pressured by concern over weaker economic growth and expectations of a supply surplus in 2024.

OPEC+ sources this week said discussions had been proving difficult and a further delay to the meeting was possible. Formal talks are set to begin on Thursday with a meeting of OPEC ministers only at 1100 GMT, though sources said the day’s schedule was subject to short delays.

The OPEC+ meeting was originally slated for 26 November but was pushed back because of a disagreement over output quotas for African producers, though sources have since said the group has largely resolved this issue.

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

RBC Capital Markets analyst Helima Croft said that Saudi Arabia, which has been reducing its output by an additional 1 million bpd since 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.

Saudi Arabia, Russia and other members of OPEC+ have already pledged total oil output cuts of about 5 million bpd in a series of steps that started in late 2022.

This includes Saudi Arabia’s additional voluntary production cut of 1 million bpd, which is due to expire at the end of December, and a Russian export cut of 300,000 bpd until the end of the year.

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