Opec+ postpones policy meeting to Nov 30, oil drops

Oil drops almost 5% as delay raises questions about output cuts

By Reuters

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The logo of the Organisation of the Petroleoum Exporting Countries (Opec) is seen outside of OPEC's headquarters in Vienna. — Reuters
The logo of the Organisation of the Petroleoum Exporting Countries (Opec) is seen outside of OPEC's headquarters in Vienna. — Reuters

Published: Wed 22 Nov 2023, 10:55 PM

Opec+ has delayed a ministerial meeting expected to discuss oil output cuts to November 30 from November 26, Opec said in a statement on Wednesday, a surprise development that sparked a further drop in oil prices.

Sunday’s meeting of the Organisation of the Petroleum Exporting Countries and allies such as Russia, known as Opec+, had been expected to consider further changes to a deal that already limits supply into 2024, according to analysts and Opec+ sources.

The delay to the meeting into next week might be to allow more time for countries to discuss both compliance with existing output cuts and potential additional cuts, an Opec+ source said, declining to be named.

“Uncertainty is never good for financial markets, with markets now having to wait longer to get clarity what Opec+ does next year,” said UBS analyst Giovanni Staunovo.

“The postponement of the meeting also shows there are some different views among the group participants.”

Brent crude was last down almost $4 a barrel, or almost 5 per cent, trading below $79. The price has fallen from near $98 in late September, pressured by rising supplies and concern about demand and a potential economic slowdown.

The Sunday meeting had been expected to convene in Opec’s Vienna headquarters. Opec’s statement didn’t mention if the group would convene online or in person on Nov. 30, although three delegates said it was expected to be in person in Vienna.

Extra cuts?

Several analysts have predicted Opec+ is likely to extend or even deepen oil supply cuts into next year and some, including Helima Croft at RBC Capital, have said Saudi Arabia might ask other members to share the task.

“We see some scope for the group to do a deeper reduction, but we would anticipate that Saudi Arabia would seek additional barrels from other members to share the burden of the adjustment,” she said this week.

Before the Opec statement, Bloomberg News reported that the meeting could be delayed for an unspecified period of time, citing delegates who said Saudi Arabia had expressed its dissatisfaction with other members about their output numbers.

Saudi Arabia, Russia and other Opec+ members have already pledged oil output cuts of about 5 million barrels per day (bpd), or about 5 per cent of daily global demand, in a series of steps that started in late 2022.

This figure includes a 1 million bpd voluntary reduction by Saudi Arabia and a 300,000 bpd cut in Russian oil exports, both of which last until the end of 2023.

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