Saudi Arabia, Russia and other members of OPEC are scheduled to meet online on Thursday and could make further changes to an agreement that already limits supply into 2024, according to analysts and OPEC+ sources, to support the market.
The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, delayed the meeting from Nov. 26. OPEC+ sources said this was because of a disagreement over output levels for African producers, although sources have since said the group has moved closer to a compromise on this issue.
OPEC+ negotiations over production quotas have often been difficult in the past, most recently at their June meeting.
WHAT IS AGREED ALREADY?
OPEC+ after long negotiations in June extended oil output cuts of 3.66 million barrels per day (bpd), or about 5% of daily global demand, until the end of 2024.
In addition, Saudi Arabia is making a 1 million-bpd voluntary reduction in output until the end of December 2023. A Russian cut in oil exports of 300,000 bpd also lasts until the end of 2023.
The group aims to produce a combined 40.58 million bpd next year after adjusting baselines and targets for several countries versus levels used this year.
Targets for several African members were reduced for 2024 to bring them in line with declining production levels. The agreement also allows the United Arab Emirates, which has been boosting its production capacity, to increase output in 2024.
Current OPEC+ production levels as of October 2023 stand at 38.19 million bpd and they include the additional voluntary cuts by Saudi and Russia amounting to 1.3 million bpd. It is not clear if those cuts would be extended into 2024.
WHAT MORE COULD THEY DO ON THURSDAY?
An OPEC+ source said he expected there to be an option for a “collective further reduction” on Thursday, without providing details. OPEC+ sources earlier this month said the group was set to consider additional cuts.
OPEC+ could further revise 2024 targets for Nigeria, Angola and Congo after reviews by outside analysts, it said in June. Angola and Congo are pumping below their 2024 targets due to falling capacity, while Nigeria has moved closer to, or surpassed its 2024 target in recent months according to some assessments.
Some analysts, including Energy Aspects, have said they expect Saudi Arabia to extend its 1 million bpd voluntary cut to at least the first quarter of 2024.
(Reporting by Alex Lawler, Editing by Marguerita Choy)