OPEC + meets to discuss production quotas and a new cut: sources

Sources told Reuters that OPEC and its allies will meet on Sunday to discuss a new agreement that may adjust countries’ production quotas and further reduce production, as the group faces slowing oil prices and a looming oversupply.

OPEC +, which includes the Organization of the Petroleum Exporting Countries and allies led by Russia, pumps about 40 percent of global crude, which means that its political decisions can have a significant impact on oil prices.

Four sources familiar with the OPEC+ discussions told Reuters that additional production cuts were being discussed among options for Sunday’s session.

“We are discussing the full package (of changes to the agreement),” one of the four sources said.

Three of the four sources said the cuts could be as much as 1 million bpd on top of the current cuts of 2 million bpd and the voluntary cuts of 1.6 million bpd announced in a surprise move in April and put into effect in May.

The April announcement helped push oil prices towards $9 a barrel, above $87, but they quickly fell back under pressure from concerns about global economic growth and demand. On Friday, the international benchmark Brent crude settled at $76.

And if the new cut is approved, it will raise the total volume of cuts to 4.66 million barrels per day, or about 4.5% of global demand.

Normally, production cuts take effect in the month following their agreement, but ministers can also agree to implement them later. They can also decide to keep production steady.

The OPEC+ ministers will start meeting from 11 am (0900 GMT) on Sunday in Vienna and will hold a full meeting from 12 am onwards, according to sources familiar with the latest schedule.

Last week, Saudi Energy Minister Prince Abdulaziz said investors who cut oil prices or bet on lower prices should “watch out,” which many market watchers interpreted as a warning of additional supply cuts.

Three OPEC+ sources also said the group would address the issue of baselines for 2023 and 2024, by which each member would make cuts.

Such conversations have previously turned into a row.

West African countries such as Nigeria and Angola have long fallen short of producing in line with their targets, but they have opposed lower baselines because the new targets could force them to make real cuts.

By contrast, the UAE has insisted on higher baselines in line with its increasing production capacity, but this could mean that its share of the overall cuts could decline.

Western countries accuse OPEC of manipulating oil prices and undermining the global economy through high energy costs. The West also accused OPEC of largely siding with Russia despite Western sanctions over Moscow’s invasion of Ukraine.

In response, OPEC insiders and observers said that the money printing carried out by the West over the past decade drove inflation and forced oil-producing countries to act to preserve the value of their main exports.

Asian countries such as China and India bought the lion’s share of Russia’s oil exports and refused to join Western sanctions against Russia.

OPEC denied media access to its headquarters to journalists from Reuters and other news media.