OPEC+ sources said that the group’s oil producers are considering reducing its output target at a meeting on October 5. They aim to reduce between 500,000 and 1M barrels per day (BPD) to stabilize the market.
An OPEC source estimated the likely number was closer to 500,000 BPD earlier this week. However, a source familiar with Russian strategy earlier this week suggested that Moscow propose a cut of up to 1M BPD. Before the meeting, discussions are anticipated to continue. A source from OPEC+ stated that things might become clearer over the weekend or Monday. The conversations often end right before the meeting date.
Despite this, prices have significantly dropped this month because of concerns about the global economy and a surge in the US currency following the Federal Reserve’s rate hike. Due to Western sanctions on its energy and banking sectors, Russia is having difficulty sustaining its oil output after it invaded Ukraine in February.
What To Expect from the Upcoming Meeting?
At its meeting in September, OPEC+, which consists of the Organization of the Petroleum Exporting Countries and allies like Russia, decided to reduce its output target by 100,000 BPD, marking its first reduction since 2020.
The conference will take place the following week against sharp market volatility, and plummeting oil prices from multi-year highs reached in March. Monday saw Brent crude reach a 9-month low of $83.65 a barrel. Analysts anticipate that OPEC+ will agree on more market assistance measures. The likelihood that OPEC+ will reduce its output, according to oil broker PVM’s Stephen Brennock, is high. Furthermore, the leadership of OPEC+ considers $90 oil to be non-negotiable; as a result, they will take action to protect this price range.
In August, Saudi Arabia, the leading OPEC producer, hinted that supply reductions would be necessary to address market instability.