The eagerly anticipated OPEC+ meeting, initially scheduled for this weekend, has been deferred due to complications arising from Saudi Arabia’s dissatisfaction with the oil production levels of fellow member nations. According to OPEC’s official statement, the ministerial meetings are now rescheduled to take place on November 30, with no explicit explanation provided for the delay.
The postponement had an immediate impact on oil prices, with Brent crude, the international benchmark, experiencing a 3.9% decline to $79.20 a barrel as of 1:43 p.m. in London.
Saudi Arabia, a key player in the OPEC+ alliance, has been voluntarily implementing an additional 1 million barrel-a-day output cut since July. However, discussions with other OPEC+ members about their production levels proved challenging, prompting the rescheduling of the meeting.This delay comes at a critical time for the oil market, which has seen prices fall by approximately 18% from their September peak, contrary to expectations that production cuts would swiftly tighten market conditions.
Prominent oil trader Pierre Andurand, founder of Andurand Capital Management, emphasized the necessity for a production cut and predicted negotiations between Saudi Arabia and other OPEC+ nations. Saudi Arabia had been expected to extend its voluntary 1 million barrel-a-day output cut through the first quarter of 2024, but Andurand suggested a potential reversal of this measure if fellow OPEC+ members do not contribute further to supply reductions.
African OPEC nations, including Angola, Congo, and Nigeria, had previously faced lower production quotas for 2024 due to capacity issues. Imposing additional production cuts from these reduced levels may encounter resistance.The United Arab Emirates, having gained the right to a modest production increase in January, may be hesitant to forgo this opportunity, further complicating consensus within the group.
The revised meeting date of November 30 coincides with the commencement of the United Nations climate talks, COP28, in Dubai. Analysts acknowledge the difficulty OPEC+ faces in reaching a consensus and taking decisive actions to address the intricate challenges currently impacting the oil market.