The OPEC+ countries discuss their current production strategy in Vienna. New oil production cuts could result from the meeting as signs of discord between top crude oil producers Saudi Arabia and Russia set the tone of the talks.
On Saturday, the OPEC+ countries began a two-day meeting in Vienna to review the current production strategy. It is possible that the daily production volume could be reduced by one million barrels (about 15.9 million litres) per day.
Experts, however, assume that the current production strategy will be confirmed, with an appeal for increased vigilance. In the run-up to the summit, Russia declared that it was not planning any changes to the current policy. Saudi Arabia, on the other hand, had spoken of possible surprises.
At the beginning of April, the 23 countries of OPEC+ had already decided to cut production, for a second time since October 2022, until the end of the year in order to keep the oil price stable. However, while the decision briefly buttressed prices, it failed to bring about lasting recovery.
Barring brief exceptions, oil prices have been falling for about a year while producers face a looming supply glut. In June 2022, a barrel of OPEC oil cost around 107,22 Euros (115 US dollars). Currently, it is around 69,93 Euros (75 US dollars).
Saudi Arabia and Russia set to butt heads at Sundays meeting
Signs of discord between top crude oil producers Saudi Arabia and Russia are set to overshadow an OPEC+ output policy meeting on Sunday that will test their alliance.
The in-person ministerial meeting of the 13 OPEC members led by Riyadh and their 10 allies headed by Moscow will be the second at the OPEC headquarters in the Austrian capital since March 2020.
An OPEC spokesman declined to comment.
Analysts are now divided over whether Saudi Arabia and Russia will keep the group on course with its current output policy, or further curtail production in a bid to prop up prices.
“The recent inconsistent rhetoric from the two heavyweights definitely threw a spanner in the works. It is hard to predict the outcome,” said Tamas Varga of PVM Energy.
Last week, Saudi Energy Minister Prince Abdulaziz bin Salman fuelled speculation of new cuts by warning traders against betting on falling oil prices.
However, Russia’s Deputy Prime Minister Alexander Novak appeared to disagree with that assessment, ruling out additional production adjustments in an interview with Russian media.
In addition to the contradictory signals, Moscow has fallen short of its pledge in February to cut output by 500,000 barrels per day.
With its war in Ukraine dragging on and Western sanctions hitting its economy, Russia has been shipping its oil to India and China as the Asian giants soak up the cheap crude.