Opec+ ministers meet to discuss additional oil output cuts for next year

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

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.
 

Saudi Arabia, Russia and other members of OPEC+ pump about 43 million bpd, more than 40% of global supply.

About 5 million bpd of cuts, representing about 5% of global demand, are already in place.
 

Sources this week told Reuters that discussions had been proving difficult and a further delay to Thursday's meeting was possible.

The OPEC+ meeting was originally slated for Nov. 26 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.

Oil prices rise on meeting sidelines

Oil prices rose by more than 1 per cent on Thursday in anticipation of the outcome of an Opec+ meeting that agreed on further supply cuts in 2024.
 

Brent crude futures for January gained 91 cents, or 1.1 per cent, to $84.01 a barrel by 1417 GMT. The front-month Brent contract expires later on Thursday. The more liquid February contract was up 83 cents, or 1 per cent, at $83.71. U.S. West Texas Intermediate crude futures rose by 81 cents, or about 1 per cent, to $78.67.

Implementing additional cuts will send prices higher in the immediate future, but the long-term impact is harder to predict, said Tamas Varga of oil broker PVM. Compliance will be an issue and the global oil balance is probably much less tight than OPEC estimates, he said.