OPEC+ pumps around 40% of global production, which means its decisions have a significant impact on oil prices.
Three OPEC+ sources told Reuters on Friday that the alliance was discussing possible options for its scheduled meeting on Sunday, when ministers from the coalition countries meet in Vienna at two in the afternoon (1200 GMT). , including a further reduction in oil production. Before that, the ministers of the OPEC countries will meet at 11:00 a.m. today, Saturday.
The sources said the cuts could reach 1 million bpd, in addition to existing cuts of 2 million bpd and voluntary cuts of 1.6 million bpd announced in a surprise decision in April and put into effect in May. .
If agreed, total production cuts will increase to 4.66 million barrels per day, or about 4.5% of global demand.
Iraq’s Oil Minister Hayan Abdul-Ghani told reporters on Saturday, in response to a question about potential cuts of up to one million barrels a day, that the figure is premature and such issues have not yet been addressed. .
Production cuts usually take effect within a month of the agreement, but ministers can also set a later implementation date.
OPEC is facing criticism from Western nations by undermining growth in the global economy and increasing inflation by raising energy costs.
In response, OPEC officials told Reuters that the increase in the money supply in the West 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 there was yearning for a decision that would ensure a sustainable balance between supply and demand.
The ministers spoke to reporters at their hotels in Vienna. OPEC refused to allow reporters from Reuters and other media to cover the meetings.
April’s surprise announcement helped oil prices rise $9 a barrel, above $87, before falling slightly on concerns about global economic growth and demand. And the price of Brent crude during Friday’s settlement hit $76 a barrel.
Last week, Saudi Energy Minister Prince Abdulaziz bin Salman said he would keep short sellers ‘painful’ and called on them to ‘be careful’, 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 further steps from OPEC+ in Vienna, Russian media reported. Before returning, he explained that the quoted statements were partial and that Moscow would work with the rest of the coalition members to determine what is best for the market while respecting 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 increase further in the second half of 2023, which could drive up oil prices.
But JP Morgan analysts said OPEC had not moved quickly enough to boost supply to record levels of U.S. production and higher-than-expected Russian exports.
“There is simply too much supply,” JP Morgan analysts said in a note, noting that further cuts could amount to around 1 million barrels per day.
“The oil market is skeptical that the Saudis and Russians will agree on further production cuts, but traders should never underestimate what the Saudis will do and benefit from OPEC+ meetings.” , said Edward Moya, analyst at OANDA.
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