Opec+ meeting delayed as talks hit turbulence over output; oil tumbles 4%

LONDON – The Opec+ meeting scheduled for this weekend has been delayed as talks ran into trouble amid Saudi dissatisfaction with other members’ oil production levels.

Ministerial meetings will now take place on Nov 30, Opec said on its website, without giving a reason for the delay.

Saudi Arabia, which has been making an additional one million barrel-a-day output cut since July, was in difficult talks with other members about their production levels, delegates said, asking not to be named because the discussions are private.

Brent crude, the international benchmark, fell 4.1 per cent to US$79.09 a barrel as of 1.18pm in London.

The Organisation of Petroleum Exporting Countries (Opec) and its allies face an increasingly fragile picture for oil prices. Crude is down about 18 per cent from its September peak to near US$80 a barrel in London, defying expectations that production cuts would cause a rapid tightening in markets.

The outlook for 2024 looks even weaker, with potential for a renewed surplus in the first half.

“I think we need a cut,” Mr Pierre Andurand, the renowned oil trader and founder of Andurand Capital Management, said in an interview with Bloomberg TV earlier on Nov 22. “The Saudis will probably want the other countries to cut as well, so I think it’s going to be a negotiation.”

Brent prices extended losses after the potential delay was reported, sinking as much as 3.3 per cent to briefly drop below US$80 a barrel in London.

Riyadh was widely expected to extend a unilateral one million barrel-a-day curb through the first quarter of 2024 to keep markets in balance. But the kingdom could reverse the measure if its counterparts do not contribute further to the supply reductions, Mr Andurand said.

Securing the cooperation of other Opec+ producers could be a tall order.

At the last meeting in June, African Opec nations Angola, Congo and Nigeria were pressed to accept lower production quotas for 2024 as their capacity has deteriorated. If these countries were subsequently asked to make further production cuts from those lower quota levels, that could be difficult to accept.

The African countries secured the right to a review by external consultants, and Nigeria at least has shown recently it can surpass its new limits. It pumped 1.416 million barrels a day in October, or 36,000 a day above the target for 2024.

Meanwhile, the United Arab Emirates has got the right from Opec+ to increase production modestly in January in order to deploy recent capacity additions, and may be reluctant to forsake that long-awaited opportunity.

“If you are in Opec+ shoes, they must be thinking that something needs to be done,” Mr Christof Ruehl, a senior analyst at Columbia University’s Centre on Global Energy Policy, said. Yet, “it will be more difficult for them to do something than people expect. It’s hard to see how they could get on the same page”. BLOOMBERG