OPEC and its allies will meet on Sunday to discuss a new pact that may include revising nations’ output limits for this year and next, as well as a further drop in production, according to sources, as the organisation grapples with falling oil prices and an impending supply glut.
OPEC+, which includes the Organisation of Petroleum Exporting Countries and allies led by Russia, produces almost 40% of the world’s crude, implying that its policy decisions have a significant influence on oil prices.
Since 1971, Nigeria has been a member of the Organization of Petroleum Exporting Countries.
Four sources familiar with OPEC+ discussions have told newsmen that additional production cuts were being discussed among options for Sunday’s session.
“We are discussing the full package of changes to the deal,” one of the four sources said.
Three out of four sources said cuts could amount to 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 which took effect in May.
The April announcement helped to drive oil prices about $9 per barrel higher to above $87, but they swiftly retreated under pressure from concerns about global economic growth and demand. On Friday, international benchmark Brent settled at $76.
If approved, the new cut would bring the total volume of reductions to 4.66 million bpd, or around 4.5% of global demand.
Typically, production cuts take effect the month after they are agreed upon, but ministers could also agree on a later implementation. They could also decide to hold output steady.
OPEC+ ministers will start a full meeting at 1100 GMT, two hours later than planned, according to sources familiar with the latest schedule.
Last week, Saudi Arabia’s Energy Minister Prince Abdulaziz said investors who were shorting the oil price or betting on a price fall should “watch out”, which many market watchers interpreted as a warning of additional supply cuts.
Baselines for 2023 and 2024
Three OPEC+ sources also said that the group will address the issue of baselines for 2023 and 2024, from which each member performs cuts.
Such talks have previously turned contentious.
West African countries such as Nigeria and Angola have long been unable to produce in line with their targets but have opposed lower baselines because new targets could force them to perform real cuts.
By contrast, the UAE has insisted on getting higher baselines in line with its growing production capacity, but that would mean its share in the overall cuts might decrease.
Western nations have accused OPEC of manipulating oil prices and undermining the global economy through high energy costs. The West has also accused OPEC of siding too much with Russia despite Western sanctions over Moscow’s invasion of Ukraine.
In response, OPEC insiders and watchers have said the West’s money printing over the last decade has driven inflation and forced oil-producing nations to act to maintain the value of their main export.
Asian countries such as China and India have bought the lion’s share of Russian oil exports and refused to join Western sanctions on Russia.
