In a few days, the “OPEC +” alliance will hold its regular monthly meeting to decide on the oil supplies that major producers will secure next October.
Expectations so far indicate a tendency for the coalition, which includes OPEC countries and their allies (the most important of which is Russia), to reduce production at the meeting scheduled for the fifth of next month.
Last week, Saudi Energy Minister Prince Abdulaziz bin Salman referred to the ability of the “OPEC +” alliance to “deal with challenges … including reducing production at any time,” which sparked concerns.
The statements of the Saudi Energy Minister came in his interview with Bloomberg Agency, extracts of which were published by the Saudi Press Agency (SPA), last Monday.
The dialogue came at a time when oil prices were falling amid fears of a drop in demand and a slowdown in global growth. However, Prince Abdulaziz’s statements pushed oil prices to rise at the end of the week, and to gain again on Monday due to talk of a possible production cut, in addition to other emergency considerations.
But on Tuesday, prices gave up their gains as the market feared that a sharper increase in interest rates by central banks would lead to a global economic slowdown and lower demand for fuel.
Analysts from “Heitung Futures” told Reuters, “Risk appetite has declined due to the expectation that the Federal Reserve will continue to raise interest rates… The decline in natural gas prices in Europe is also exacerbating the uncertainty of the energy crisis.”
The head of the International Energy Agency, Fatih Birol, said Monday that Russian oil production has exceeded expectations in the wake of the war in Ukraine, which also affects prices. But he said Moscow would find it increasingly difficult to maintain production as it began to suffer from Western sanctions imposed over the Ukraine war.
Are there any scenarios for an “OPEC +” meeting?
It is certain that no decision will be made to raise production and pump additional amounts in October, after Prince Abdul Aziz’s hints, especially since the majority of the member states of the organization have announced their support for the statements of Saudi Arabia regarding the market.
The coalition had agreed, during its meeting on August 3, to a slight increase in production by 100,000 barrels per day for the month of September, amid fears that the global recession would reduce demand. This slight increase followed an increase of 600,000 barrels per day that occurred in July and August.
Will a decision be taken to return to this increase for the month of October, or will there be a greater reduction between 200 thousand barrels and 300 thousand barrels per day? Or will the coalition decide to stabilize production at current levels?