The upcoming meeting of the Organisation of Petroleum Exporting Countries and its allies (OPEC+), initially scheduled for this weekend, has been postponed to November 30.
The delay, announced on OPEC's website, follows challenging discussions primarily driven by Saudi Arabia's dissatisfaction with fellow members' oil production levels.
Saudi Arabia, having reduced its output by an additional one million barrels per day since July, engaged in strenuous negotiations over production quotas, the Australian Financial Review reported, citing unnamed delegates.
Oil prices fell as a result of the delay with the benchmark Brent crude falling 4.6% to US$78.63 per barrel, while US oil plunged 5% to US$73.90 in New York trading sessions. However, these losses moderated to about 2% later in the day.
Oil outlook dim
With crude oil prices 17% lower than their September peak, OPEC and its allies face a precarious future despite expectations that production cuts would tighten the market.
The outlook for next year is even bleaker, with potential for a renewed surplus in the first half.
Andurand Capital Management founder and prominent oil trader Pierre Andurand stressed the necessity for production cuts in a Bloomberg television interview, hinting at intricate negotiations ahead.
“I think we need a cut. The Saudis will probably want the other countries to cut as well, so I think it’s going to be a negotiation,” he said.
Saudi Arabia is widely expected to extend its unilateral 1 million barrels a day production cut into the first quarter to maintain market equilibrium.
However, Andurand said this strategy could be re-evaluated if other OPEC+ members did not contribute to further supply reductions.
Reluctant members
The challenge of attaining consensus among OPEC+ nations remains significant.
At the June meeting, African members such as Angola, Congo and Nigeria were persuaded to accept reduced quotas for 2024 due to declining production capacities.
Additional cuts could be contentious for these countries, though Nigeria recently exceeded its new quota.
Simultaneously, the United Arab Emirates, which is set to modestly increase production in January, may be hesitant to forgo this opportunity.
The rescheduled OPEC+ meeting now coincides with the United Nations climate talks (COP28) in Dubai, adding a complex layer to the discussions.