The Organization of the Petroleum Exporting Countries (OPEC) announced in a statement issued on Wednesday that the OPEC+ alliance decided to postpone a ministerial meeting that was scheduled to be held, which was expected to discuss issues of oil production cuts, from November 26 to November 30. This sudden postponement resulted in further pressure on oil markets, leading to a further decline in crude prices.
The ministerial meeting was supposed to discuss the measures that the coalition will take to control oil production with the aim of enhancing the stability of energy markets and supporting oil prices. With the meeting postponed until the end of November, this unexpected development has increased tension in the oil arena.
Next Sunday’s meeting of the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, is expected to review additional amendments to the current agreement that limits oil supplies until 2024, according to estimates from analysts and sources within the alliance.
This step comes as part of ongoing efforts to enhance the stability of the oil market and support its prices. The alliance is expected to be willing to take additional steps to address the challenges facing the sector, including increased production by some competing countries and the effects of the economic pandemic.
A source within the OPEC+ alliance, who requested to remain anonymous, also confirmed that postponing the meeting may be for the purpose of allowing more time for member states to discuss issues of compliance with the current production cuts, in addition to negotiating possible future measures.
This statement reflects an indication that there is a particular interest in verifying countries’ commitment to reducing oil production and compliance with previous agreements.
OPEC+ meeting delay sparks financial market uncertainty
Giovanni Stanovo, an analyst at UBS, commented on the latest developments, saying: “Uncertainty is never good for financial markets, as markets will now have to wait longer to get a clear picture of what the OPEC+ alliance will do next year.” This comment reflects concern about the negative impact of postponing the meeting on stability in financial markets.
He added: “Postponing the meeting also shows that there is a difference in views among the participants in the group.” This comment indicates a divergence of views among members of the OPEC+ alliance, which could lead to difficulties in reaching a clear agreement on future production policies.
The price of Brent crude saw a sharp decline in the latest trading sessions, falling by about four dollars a barrel, or nearly five percent, to trade below $79. This sharp decline reflects negative developments in the oil market.
This decline comes after the price of a barrel had reached about $98 in late September, under the weight of an increase in supplies and growing concerns about demand, in addition to the expected economic impacts resulting from the slowdown in economic growth.
The meeting was expected to be held on Sunday at the headquarters of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna. However, it was not indicated in the organization’s statement whether the meeting will be held online or in person on November 30. However, three delegates indicated that the meeting was expected to be held in person in Vienna.
This possible determination of the type of meeting reflects the organization’s and coalition members’ preparations for a personal meeting to discuss the current challenges in the oil market and make the necessary decisions to ensure its stability.
Expectations of enhanced oil supply cuts by OPEC+
Many analysts expect the OPEC+ alliance to extend oil supply cuts next year, and there are expectations that these cuts will increase. Helima Croft, an analyst at RBC Capital, said it was possible that Saudi Arabia could ask other members to bear part of the burden.
“We see some scope for the group to increase cuts, but we expect Saudi Arabia to seek some oil from other members to share the burden of adjustment,” Helima Croft said this week. This statement indicates Saudi Arabia’s willingness to explore opportunities for further reductions in oil supplies and, at the same time, seeks to stimulate cooperation by other countries in bearing part of the responsibility.
Before the Organization of the Petroleum Exporting Countries (OPEC) statement was issued, Bloomberg reported, citing delegates, that the meeting might be postponed for an indefinite period. These people indicated that Saudi Arabia expressed its dissatisfaction with the oil production numbers proposed by some other members.
This escalation in tensions shows the challenges facing the decision-making process within the OPEC+ alliance. The lack of agreement on future production levels and potential member cuts shows Saudi Arabia’s willingness to take a leadership role in an attempt to balance the global oil market.
Saudi Arabia and Russia, along with other members of the OPEC+ alliance, announced their commitment to reduce oil production by about five million barrels per day. This reduction amounts to approximately five percent of the daily global demand for oil. The move was made as part of a series of measures that came into effect in late 2022.
OPEC+ meeting delayed over production disputes
When reliable sources announce the postponement of the OPEC+ meeting dedicated to discussing the group’s policy, this news arouses interest and opens a window to questions about the reasons and challenges that may be behind this important decision. In this context, sources indicate that there are disagreements between some OPEC+ member states regarding current production levels and the potential cuts associated with them.
These differences appear to be a major factor influencing the decision to postpone the meeting, as members seek consensus on production policies and determine the course of future plans to ensure the stability of oil markets. There appears to be a difference in views between member states on the extent to which continued cuts will impact oil prices and their national economies.
These differences reflect the great challenges facing oil-producing countries in light of the continuing fluctuations in the global market. In light of the shifts in demand and supply, it appears that members are seeking to reach a balance that achieves everyone’s interests and limits negative impacts on their economies.
The differences within OPEC+ appear to particularly concern African countries, as three sources within the organization indicated. This issue arises after OPEC+ announced, following its last meeting in June, that the oil production quotas of Angola, Nigeria and Congo for 2024 would be linked to reviews by external analysts.
These reviews appear to be a proactive step to deal with any potential challenges that may arise in the future, and reflect the desire to ensure that all Member States adhere to the agreed reductions. This measure shows the importance of transparency and close monitoring to ensure oil market stability and balance in production.
