OPEC divided over whether to increase oil production cuts ahead of meeting
OPEC energy ministers will meet with ten non-OPEC allies in Vienna today for its annual meeting, with discussions likely to focus on further oil supply cuts in a bid to sustain global prices. The current agreement to curb production by 1.2 million barrels per day will expire on March 31 if no further agreement is struck.
Saudi Arabia is reportedly pushing for deeper production cuts of up to an additional 400,000 barrels per day as the kingdom looks to prop up oil prices ahead of the partial IPO of its state-owned oil company, Aramco.
However, Russia—the bloc’s second most powerful member—is resisting changes to the current production quotas. Moscow wants to have gas condensates (similar to light crude oil) removed from the current deal. This move would allow Russian firms to boost their gas production while still adhering to the OPEC agreement.
Further production cuts could encourage an increase in output from US shale fields, which require higher prices to become commercially viable.
Analysts expect that OPEC will favour extending the deadline for current cuts either to June or December 2020 over decreasing production quotas. Instead, OPEC will likely push for certain countries—namely Russia, Nigeria, Iraq, and Kazakhstan—to adhere to established quotas, thus finding a balance on prices without boosting shale too much.
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