By John Ikani
Major oil-producing nations, led by Riyadh and Moscow, are progressing towards an agreement aimed at further reducing production to support volatile prices, a source close to the negotiations revealed to AFP.
Ministers from the 13-member Organization of the Petroleum Exporting Countries (OPEC), spearheaded by Saudi Arabia, and its 10 partners led by Russia, have reached a consensus to ‘further cut production by 600,000 to one million barrels a day,’ as reported by the source.
The specific magnitude of these new reductions is expected to be confirmed during today’s concluding virtual meeting, which commenced around 1430 GMT, the source added.
Furthermore, it is anticipated that Saudi Arabia will extend its current voluntary reduction of one million barrels per day into 2024, according to the source.
In response to the potential for additional cuts, oil prices surged, with Brent crude registering a 1.3 percent increase around 1515 GMT.
Amid concerns of global economic slowdown, analysts widely predicted that OPEC+ producers would either extend or deepen production cuts into the upcoming year to counter the recent decline in prices.
Recent days have witnessed intense negotiations, especially as Saudi Arabia, bearing a significant portion of the cuts, sought to persuade African countries to contribute by accepting reduced production quotas.
Among those hesitant to commit, Angola and Nigeria aimed to boost production to secure foreign currency.
— Balance —
Since the close of 2022, the alliance has implemented supply cuts of approximately five million barrels per day (bpd).
Their initial reduction of around two million barrels occurred during their first in-person meeting post-Covid pandemic.
In May, they enforced additional cuts by nine members totalling 1.6 million bpd.
A month later, Riyadh announced an additional removal of one million barrels from the market, a decision extended monthly until the end of 2023, and followed to a lesser extent by Russia.
However, investors caution that reducing production may not suffice to prevent further price declines.
While oil prices are distant from the peak of nearly $140 per barrel reached after the Russian invasion of Ukraine, they continue to surpass the average of the last five years, presently hovering at around $80 per barrel, after nearly touching $100 in September.
Producers remain apprehensive about softening demand, particularly from slowing economies like China, the world’s largest crude importer.