Global oil markets are awaiting the OPEC+ meeting scheduled for October 5, to see the alliance’s decision on the amount of oil production cuts in light of the recent deterioration in prices.
After dramatic spikes, prices have fallen sharply this month by about 30 percent on concerns of a global economic recession and following the fallout from a stronger dollar after the Federal Reserve raised interest rates. Oil contracts are traded on the London Stock Exchange at around $85 a barrel.
Reuters revealed a source familiar with the matter that Russia would likely propose that the OPEC+ alliance cut production by about one million barrels per day at the next meeting, Iraqi Oil Minister Ihsan Abdul Jabbar announced Monday that OPEC+ was monitoring the state of oil prices and wanted to balance the markets.
The Iraqi minister explained in an interview with the Iraqi “Al-Ekhbariya” TV, that global factors have led to the decline in oil prices recently, the most important of which are the drops in growth rates and rising inflation.
Earlier this month, JPMorgan said OPEC+ might need to intervene by cutting up to a million barrels per day (bpd) to “stop falling prices and reorganize physical and paper markets that appear to be separate.”
It was joined by the UBS group, which said on Tuesday that OPEC+ cutting output was necessary to stop falling prices amid fears of a recession and a stronger dollar.
UBS said in a note: “The absence of action on the part of the alliance to withdraw barrels from the market is likely to lead to further downward pressure on oil market prices.
“The coalition must announce a production cut of at least half a million barrels per day in the coming days.”
Earlier this month, the coalition announced a symbolic production cut to demonstrate its willingness to stabilize oil markets.
Saudi Energy Minister Prince Abdulaziz bin Salman announced in a previous interview that the OPEC+ group does not target specific oil prices or price ranges, but rather aims to support market stability and balance of supply and demand for the benefit of market participants and the oil industry. He vowed that the alliance would remain “proactive and pre-emptive.”
Nigerian Supply Minister Timber Silva said last week that OPEC+ may be “forced” to make further production cuts if crude prices continue to fall.
Sources say that despite speculation about proposals for deep production cuts between 500,000 and 1 million barrels, it is too early to say what the meeting results will be and what decisions will be taken.
