OPEC+ holds ‘difficult’ talks on cuts and quotas

VIENNA (Reuters) – The Organization of the Petroleum Exporting Countries (OPEC) and its allies met on Sunday to agree further production cuts as they face low oil prices and an imminent oversupply, people familiar with the matter said. told Reuters.

The group, known as OPEC Plus, delayed the start of formal talks by at least three and a half hours as member countries debated production standards on the sidelines to calculate cuts and quotas, the people said.

OPEC’s most influential member and the largest producer in the Gulf, led by Saudi Arabia, are trying to persuade low-producing African countries such as Nigeria and Angola to set more realistic production targets, according to sources familiar with the matter. board.

“Negotiations with African producers have proven difficult,” said an OPEC+ official. Meanwhile, the Gulf producing country, the United Arab Emirates, had asked for higher thresholds to reflect its growing capacity, officials said.

OPEC+, which groups the Organization of the Petroleum Exporting Countries and its Russian-led allies, supplies about 40% of the world’s oil, meaning its policy decisions can have a big impact on oil prices.

Further cuts are among the options at Sunday’s meeting, four sources familiar with OPEC+ discussions told Reuters.

“We are discussing the full package (of deal changes),” one of the four sources said.

Three of the four sources said the cut would be 1 million bpd, in addition to the existing 2 million bpd cut and the 1.6 million bpd voluntary cut that was suddenly announced in April and took effect in May. said it could be reached.

Oil prices rose about $9 a barrel following the April announcement, above $87, but quickly fell under pressure from concerns over global economic growth and demand. On Friday, the international benchmark Brent settled at $76.

If the new cuts are approved, the total cut would be 4.66 million barrels per day, or about 4.5% of global demand.

Production cuts generally take effect the month after the deal is signed, but ministers can agree to implement them later. You can also decide to keep production stable.

Saudi Arabia’s Energy Minister Abdul Aziz last week said investors shorting oil prices or betting on falling prices should be “be careful,” many market officials added. It was interpreted as a warning of supply cuts.

Baseline for 2023 and 2024

Three OPEC+ officials also said the group would address the previously debated issue of the 2023 and 2024 baselines.

Nigeria and Angola, which have long failed to meet their production targets, have opposed lowering thresholds because new targets could force them to cut significantly.

In contrast, the UAE is demanding a higher baseline as it expands its production capacity, which could mean its share of total reductions could decline.

Western powers have accused OPEC of manipulating oil prices and undermining the global economy through high energy costs. Western powers have also accused OPEC of standing on Russia’s side, despite Western sanctions over Russia’s invasion of Ukraine.

In response, OPEC insiders said Western money printing over the past decade has caused inflation, forcing oil producers to act to preserve the value of their key exports.

Asian countries such as China and India buy the largest share of Russia’s oil exports and refuse to join Western sanctions against Russia.

OPEC has denied media access to its headquarters for reporters from Reuters and other media outlets.

Reporting by Ahmad Gadar, Alex Lawler, Maha El Dahan and Julia Payne. By Dmitry Zidannikov.Editing: Hugh Lawson, Emelia Sitor-Matterise, Barbara Lewis

Our standards: Thomson Reuters Trust Principles.