News Flash
VIENNA, June 2, 2024 (BSS/AFP) - The OPEC+ group of oil-producing nations
meet on Sunday to debate their output policy, with an extension of current
production cuts likely as geopolitical and economic challenges cloud the
market.
The biannual meeting of the 12-member Organization of the Petroleum Exporting
Countries (OPEC) led by Saudi Arabia and its 10 partners headed by Russia was
originally scheduled to take place at the cartel's headquarters in Vienna.
But last week the conference was moved online, before some members were asked
to travel to the Saudi capital Riyadh. The virtual meeting is due to start at
1100 GMT.
Analysts told AFP that the 22 OPEC+ members are likely to opt for caution in
the face of geopolitical uncertainties by extending current production cuts
into the third quarter of 2024, or even to the end of this year.
Since the end of 2022, the alliance has implemented supply cuts in a bid to
boost falling oil prices.
OPEC+ members are currently slashing output by almost six million barrels per
day, both via group-wide production cuts and additional voluntary curbs.
- Looming discord over quotas -
On Sunday, the alliance might also decide to "revise quotas for some
members", said Ipek Ozkardeskaya, market analyst at Swissquote Bank.
Those members travelling to Riyadh are likely to want to push for a larger
quota, an expert close to OPEC told AFP, allowing them to increase
production.
Kazakhstan's Energy Minister Almasadam Satkaliev has confirmed his attendance
in the Saudi capital, the country's Interfax agency reported.
Kuwait will also be represented, according to a source in the oil ministry,
while Bloomberg said top officials from Iraq and Russia are also among those
expected in Riyadh.
They are among the countries -- along with Algeria and Oman -- which
participate in the voluntary supply cuts.
While revising quotas will "require further efforts from Saudi Arabia", it
"should also help protect the cartel's unity", said Ozkardeskaya.
Negotiations about the production quotas of member countries have repeatedly
been a source of discord in the past, triggering heated debates and even
shock departures.
At the end of 2023, Angola exited OPEC over a disagreement on a decision to
cut production backed by heavyweight Riyadh.
- 'Challenging environment' -
Mukesh Sahdev of Rystad Energy said he expects "intense negotiations on key
numbers related to production, reference levels, capacity and targets" at
Sunday's meeting.
The alliance faces the issue of "actual barrels flowing to the market likely
being higher than what is accounted for", he said, adding that this could
potentially derail the cartel's strategy.
Moreover, Iraq and Kazakhstan exceeded their quotas in the first quarter,
while Russia overproduced in April.
Oil prices have changed little since the last meeting in November, hovering
around $80 a barrel.
Amid questions surrounding global demand, some analysts believe that
gradually allowing more oil to hit markets might be ahead in 2025.
OPEC continues to stick to its demand forecasts for 2024, while the
International Energy Agency is less optimistic and has revised its estimates
downwards.
Amid "above-average inflation, slowing global growth outlook, central bank
uncertainties, rising US oil production and Middle East tensions, the
environment is challenging", said Ozkardeskaya.