Reuters news agency quoted sources in OPEC + as saying that the alliance that includes the Organization of the Petroleum Exporting Countries (OPEC) and allies, led by Russia, will hold two-day meetings today, Saturday, that are likely to conclude with an agreement on new production cuts of up to one million barrels per day, as OPEC faces a decline in production. Oil prices with abundant supply looming large.
OPEC + pumps about 40 percent of global production, which means that its decisions have a significant impact on oil prices.
Three sources from OPEC + told Reuters, on Friday, that the alliance is discussing possible options for its scheduled meeting on Sunday, when the ministers of the coalition countries meet in Vienna at two in the afternoon (1200 GMT), including an additional reduction in oil production. Prior to that, OPEC ministers will meet at 1100 am today, Saturday.
The sources said cuts could reach 1 million bpd, on top of existing cuts of 2 million bpd and voluntary cuts of 1.6 million bpd announced in a surprise move in April and put into effect in May.
If this is agreed upon, the total production cuts will rise to 4.66 million barrels per day, or about 4.5 percent of global demand.
On Saturday, Iraqi Oil Minister Hayan Abdul-Ghani told reporters, in response to a question about possible cuts reaching one million barrels per day, that this figure is premature and that these matters have not yet been addressed.
Production cuts usually take effect in the month following the agreement, but ministers can also set a later implementation date.
OPEC is facing criticism from Western countries by undermining the growth of the global economy and increasing inflation by raising energy costs.
In response, OPEC officials told Reuters that the West's increase in money supply over the past decade has exacerbated inflation and forced oil-producing countries to take measures to preserve the value of the main commodity among their exports.
Asian countries such as China and India bought the lion's share of Russia's oil exports, and refused to join Western sanctions against Russia.
Surprising announcement
UAE Energy Minister Suhail Al Mazrouei said that there is aspiration for a decision that guarantees a sustainable balance of supply and demand.
The ministers spoke to reporters at their hotels in Vienna. OPEC refused to grant journalists from Reuters and other media outlets permission to cover the meetings.
The surprise announcement in April helped oil prices rise by $9 a barrel, above $87, before easing slightly under pressure from concerns about global economic growth and demand. And the price of Brent crude at the settlement on Friday reached $ 76 a barrel.
Last week, Saudi Energy Minister Prince Abdulaziz bin Salman said he would keep short sellers pain and urged them to be cautious, which many market watchers interpreted as a warning of further supply cuts. But Russian Deputy Prime Minister Alexander Novak later said he did not expect any new steps from OPEC+ in Vienna, Russian media reported. Before returning, he explained that the statements that were quoted were partial, and that Moscow would work with the rest of the coalition members to determine what is best for the market while adhering to all previous decisions.
Novak, who is on the US sanctions list, is expected to attend the meetings in Vienna on Sunday.
The International Energy Agency expects global oil demand to rise further in the second half of 2023, potentially boosting oil prices.
