OPEC+ delegates said they expected a planned meeting next month on restoring oil output to be held virtually rather than at the group's headquarters in Vienna as initially planned.
Some members said they had not received an invitation to the in-person gathering of the alliance, which has yet to begin typical logistical preparations for a Dec. 1 meeting at its secretariat. The representatives asked not to be identified because the talks are private.
The rally will be closely watched as market watchers including Citigroup and JPMorgan Chase & Co. are skeptical that OPEC+ will continue to increase production next year. They warn that a looming supply glut has already pushed crude toward $60 a barrel and prices could fall further if the group increases output.
If this news is confirmed, it will be the third time that the OPEC+ group led by Saudi Arabia and Russia has changed the initially planned meeting in Vienna to an online meeting.
Nevertheless, at the alliance's last meeting in June, Saudi Arabia sent an invitation at the last minute to the other seven members currently participating in the production cuts, asking them to gather at the Ritz-Carlton hotel in Riyadh. A similar unexpected situation may still arise this time.
Sources and analysts say that OPEC+ has little room for maneuver in its oil policy at the December meeting: due to weak demand, there are risks in increasing production, and since some member countries want to increase production, it is difficult to deepen production cuts.
Earlier, according to three OPEC+ sources familiar with the discussions, due to weak global oil demand, OPEC+ may again postpone production increases at its meeting on December 1.
OPEC+ has postponed the start date of its gradual recovery of production cuts twice, with ministers last postponing production increases for a month at the meeting on November 3, which means OPEC+ will begin to gradually restore production by 2.2 million barrels per day in January next year.
Macquarie's analysts say that given the weak seasonal demand, the outlook for OPEC+ to increase production in the first half of 2025 looks bleak, and the possibility of deepening production cuts is also low, as several OPEC+ member countries are pushing for increases rather than reductions, with the UAE being a major representative, believing that its production has long been maintained at around 3 million barrels per day, far below its capacity.
OPEC+ sources say that the UAE has secured an increase in production quota for 2025, and any action to postpone production increases needs to address this issue. Iraq has also been pushing for an increase in quotas.
Macquarie's Walt Chancellor said, "We believe a larger reduction may ultimately be needed to support oil prices next year, which may be hard to accept."
Against the backdrop of weak demand in Asia and increased supply in the United States, Brent crude futures prices have fallen 15% since early July. A price of about $75 per barrel is too low for Saudi Arabia and many other OPEC members, insufficient to cover government expenditures. The International Monetary Fund (IMF) estimates that Riyadh needs oil prices close to $100 per barrel to fund its ambitious transformation plans.
Article reposted from: Jinshi Data
