OPEC+ to consider whether more oil cuts needed

NOVEMBER 18, 2023

OPEC+ is set to consider whether to make additional oil supply cuts when the group meets later this month, three OPEC+ sources told Reuters after prices dropped by almost 20 percent since late September.

Oil has slid to around $79 a barrel for Brent crude from a 2023 high in September near $98. Concern about demand and a possible surplus next year has pressured prices, despite support from the OPEC+ cuts and conflict in the Middle East.

Saudi Arabia, Russia and other members of OPEC+ have already pledged total oil output cuts of 5.16 million barrels per day, or about 5% of daily global demand, in a series of steps that started in late 2022. The cuts include 3.66 million bpd by OPEC+ and additional voluntary cuts by Saudi Arabia and Russia.

One OPEC+ source, who declined to be named, said 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.

"It is not pleasant to see that market volatility is greater ahead of the next meeting while fundamentals overall remain solid," one of the OPEC+ sources said. "Ministers are likely to express some thoughts on what to do more, to secure a stable trend."

Ministers from OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, meet on Nov. 26. The group already has a plan to curb supplies by 3.66 million bpd into 2024 made during its last meeting in June.

OPEC and the Saudi Energy Ministry did not respond to requests for comment on Friday.

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.

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 said it was too early to say whether further cuts will be discussed, while another said he did not think it was likely with the caveat to "wait and see".