The sources said the UAE would get a new, higher baseline if a deal is struck.
Baselines are oil production levels against which reductions are calculated.
It should be noted that in June 2021, the UAE’s baseline production was set at 3.5 million barrels per day, an increase of 332,000 barrels, and Kuwait’s baseline production was raised to 2, 95 million barrels per day, and Iraq at 4.8 million barrels. per day, an increase of 150,000 barrels per day for both countries, from May 2022.
Reuters quoted UAE Energy Minister Suhail Al Mazrouei in Vienna as saying he was confident OPEC+ would reach a deal.
Yesterday, Al Mazrouei said: “There is an aspiration for a decision that guarantees a sustainable balance between supply and demand,” according to Reuters.
The ministers spoke to reporters at their hotels in Vienna. And OPEC refused to allow journalists from “Reuters” and other media to cover the meetings.
production cut forecasts
Major oil-producing nations, led by Saudi Arabia and Russia, are meeting on Sunday to decide whether to further cut the amount of crude oil they supply to the global economy.
Previous cuts approved by the “OPEC Plus” alliance have only kept prices from falling, and benchmark Brent crude is only trading at around $75 a barrel.
Russia, the most important non-OPEC ally, had indicated that it saw no need to change production levels, but reassured that it would work with the rest of the alliance members to determine what is best for the market while respecting all previous decisions.
On Sunday, oil ministers meet to discuss production at OPEC headquarters in Vienna.
‘OPEC+’ sources told Reuters the alliance was discussing possible options, including a further oil production cut of around one million barrels, at today’s meeting.
OPEC+ pumps around 40% of global production, which means its decisions have a significant impact on oil prices.
For his part, Iraqi Oil Minister Hayan Abdul-Ghani said it was too early to talk about an “OPEC+” cutting oil supplies by around a million barrels a day before Sunday, according to Reuters.
In this context, James Swanston, economist for the Middle East and North Africa region at Capital Economics, said: “We expect OPEC Plus to meet current production quotas.”
“There were indications that governments might be willing to live with lower oil prices and manage budget deficits,” he added.
“The impact of high oil prices on the global economy will greatly affect ministers’ minds,” said Jorge Leon, senior vice president of oil market research at Rystad Energy.
He added that “high oil prices would fuel inflation in the West at a time when central banks were beginning to see inflation gradually recede.”
“This could prompt central banks to continue raising interest rates, a move that is detrimental to the global economy and oil demand,” Leon wrote in a research note.
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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