The summit of the organization of oil exporters – OPEC + was scheduled for last weekend, but was postponed to the last day of November. The reason was the breach of the arrangements between two African exporters – Nigeria and Angola. It is uncertain whether Saudi Arabia will extend its voluntary cuts in oil production. Its position is very important because it is the largest oil producer in OPEC.
The OPEC+ meeting will start on Thursday. Saudi Arabia will likely insist on further production cuts. Initially, the meeting of the expanded cartel countries was to be held on November 26, but due to the lack of agreement on oil production limits for individual countries, it was postponed to November 30.
OPEC+ Summit. What will Saudi Arabia do?
“The key thing is that in the entire new agreement, Saudi Arabia does not want to cut production again, but maintain the current voluntary cut at the level of 1 million barrels per day. This would mean that other countries would have to shoulder most of the supply reduction. Russia is certainly one of such countries, which is expected to export up to 700 kbd more oil than the findings indicate,” we read in a statement from an XTB analyst.
Dorota Sierakowska, commodity markets analyst at DM BOŚ, notes that talks between the cartel countries are still ongoing. “The point of contention is primarily oil production in two African countries: Nigeria and Angola. Both producers demand an increase in the crude oil production limit. For now, their limits are relatively low – in June they were lowered due to the fact that African countries had previously consistently exceeded the limits. However, since then they have managed to keep oil production in check, which is now being used as an argument for a return to higher limits,” he explains.
In her opinion, the chances of reaching an agreement on Nigeria and Angola by November 30 are high – so this issue no longer arouses much emotion. “Ultimately, what may be much more important is whether the largest oil producer in OPEC, i.e. Saudi Arabia, decides to extend its own voluntary cuts in oil production – the current cuts are valid until the end of December,” writes Sierakowska.