Tough talks as OPEC+ weighs fresh output cuts

AFP | Stockholm

The Daily Tribune – www.newsofbahrain.com    

Tough negotiations between major oil producers led by Riyadh and Moscow were under way yesterday to consider slashing output further in a bid to prop up prices.

The 13-member Organisation of the Petroleum Exporting Countries (OPEC) headed by Saudi Arabia was consulting with 10 other oil majors, including Russia, to review the grouping’s future output policy.

The in-person OPEC+ meeting -- which started three hours later than originally scheduled -- was dragging on through Sunday afternoon at the group’s headquarters in Vienna, a source close to the talks told AFP.

Analysts had largely expected OPEC+ producers to maintain their current policy, but signs emerged this weekend that the 23 countries may make deeper cuts.

An output cut of one million barrels per day (bpd) was being discussed, according to the source close to the talks.

In April, several OPEC+ members agreed to cut production voluntarily by more than one million bpd -- a surprise move that briefly buttressed prices but failed to bring about lasting recovery.

Bloomberg news agency reported a fight with the grouping’s African members threatened to derail the gathering.

While the United Arab Emirates was pushing for a change to the way its output cuts are measured, African countries were reluctant to give up some of their unused quotas -- a politically unpalatable option, it said, citing delegates.

Several OPEC+ nations -- including Angola and Nigeria, already seeming to be at maximum capacity -- have struggled to meet their quotas.

Most delegations remained tight-lipped as they arrived at the headquarters yesterday.

Oil prices have plummeted about 10% since the April cuts were announced, with Brent crude falling close to $70 a barrel, a level it has not traded below since December 2021.

Traders worry that demand will slump, with concerns about the health of the global economy as the United States battles inflation and higher interest rates while China’s post-Covid rebound stutters.

On arriving in Vienna on Saturday, Emirati energy minister Suhail Mohamed Al Mazrouei said he expected the outcome of Sunday’s meeting to “balance the market and ensure we are ready for any challenges in the future”.

Russia’s Deputy Prime Minister Alexander Novak “sees no need for OPEC+ to change course” because it would hardly benefit from higher prices, Commerzbank commodity analysts said in a research note.

Since Western sanctions hit Moscow over Ukraine, Russia has been shipping oil to India and China as the Asian giants soak up the cheap crude.

Novak did not comment as he entered the OPEC building yesterday.