Uche Cecil Izuora
There is likelihood that the Organization of Petroleum Exporting Countries and its allies known as OPEC+ would at its meeting on Thursday extend its latest round of oil output cuts until the end of the first quarter.
The prediction is coming firm four OPEC+ sources as reported by Reuters in a move by the Organization to provide additional support for the oil market.
The OPEC+, which pumps about half the world’s oil, has been aiming to unwind output cuts through 2025.
However, a slowdown in global demand and rising output outside the group pose hurdles to that plan and have weighed on prices.
“It is likely that this reduction will be extended for the first quarter,” one of the sources told Reuters. All of the sources declined to be identified by name. Another source said the prospect of a longer, six-month extension was unlikely.
The OPEC+, and allies which include Russia, meets on Thursday to decide its output strategy.
Despite the group’s supply cuts, global oil benchmark Brent crude has mostly stayed in a $70 to $80 per barrel range this year and on Tuesday was trading above $72 a barrel, having hit a 2024 low below $69 in September.
“The likelihood of another OPEC roll of cuts into the first quarter is all but priced in,” said John Evans of oil broker PVM.
OPEC+ members are holding back 5.86 million barrels per day of output, or about 5.7 per cent of global demand, in a series of steps agreed since 2022 to support the market.
An output hike of 180,000 bpd – a fraction of the total – was planned for January from the eight members involved in OPEC+’s most recent cuts of 2.2 million bpd. The hike has been delayed from October due to falling prices.
High-level talks within OPEC+ ahead of the meeting, which was earlier scheduled for Dec. 1, have focused on the length of a delay to the production hike, sources said.
Saudi Crown Prince Mohammed bin Salman flew to the United Arab Emirates, the Saudi state news agency said on Sunday, the first such visit in three years.
An issue that needs to be addressed is a 300,000 bpd output hike for the United Arab Emirates agreed in June that is scheduled to start in January 2025 and be phased in gradually. The UAE is keen for that to go ahead, the sources said.