Opec+ meeting delay "hints at growing rift among producers"

(Alliance News) - International oil prices recovered slightly from Wednesday's fall on Thursday, after a key ministerial meeting of the Organization of the Petroleum Exporting Countries and its allies was pushed back from Sunday to November 30.

The Vienna-based organisation announced the postponement of the Opec+ alliance gathering in a brief statement, without providing any explanation.

Brent crude dropped to around USD79.27 on Wednesday afternoon in the UK, before recovering to USD81.12 around midday on Thursday.

The market was left to speculate about the postponement, with SPI Asset Management's Stephen Innes noting the delay "hints at a growing rift among Opec+ producers".

According to AFP-cited reports, Angola and Nigeria pushed back against lower targets that were urged by others in the alliance. Saudi Arabia is thought to have been preparing to extend one-million-barrel-a-day output cut into 2024.

"With US and non-Opec production on the rise, it should be no surprise that producers want to pump more oil, not trim production, for fear of losing even a tiny sliver of the market share," Innes considered.

In September, Saudi Arabia and Russia extended their output cuts to the end of this year. The Saudi production reduction, which first took effect in July, was maintained at one million barrels per day. Russia's export cut of 300,000 barrels per day will continue for the same period.

In recent months, nine Opec+ members including Riyadh, Moscow, Baghdad and Dubai have reduced their output.

"Now we can, for all intents and purposes, rule out the 25% chance of a production cut and assume the base case production extension through [the first quarter of] 2024," Innes said.

The recent weakness in oil prices prior to the postponement may also be due to the "Venezuelan crisis", said XS.com CEO Mohamad Ibrahim.

"South American countries continue to take steps to boost production after the lifting of sanctions, potentially returning to suitable production levels by 2024, adding an additional challenge to oil supply and demand dynamics," Ibrahim explained.

However, the main factor weighing on the expected decline in oil demand remains a sluggish global economic outlook, Ibrahim maintained, pointing to worries about China and the eurozone in particular.

By Elizabeth Winter, Alliance News senior markets reporter

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