Two sources: OPEC+ agrees in principle to reduce oil ‎production by more than ‎‏1‏‎ bpd

Two delegates before a meeting of ministers of the OPEC+ coalition, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, said online on Thursday that OPEC+ is likely to agree to reduce oil production by at least one million barrels per day in early this year. The next is led by Saudi Arabia, which extends its additional voluntary reduction and other members approve fewer restrictions on production

According to Reuters, a preliminary agreement was reached to approve an additional reduction of more than one million barrels per day

The two delegates added that the agreement will include Saudi Arabia extending the voluntary reduction of one million barrels per day that it began since July, in addition to additional contributions from other members.

They pointed out that the extent of the contribution that other members will make is unclear. While a third source said that a new reduction will be agreed upon today, Thursday, without specifying a specific number

The third source said in response to a question about the possible reduction of one million barrels per day, “It depends on the other participants in the group. It may be soon or more.”

With the end of the production cut voluntarily approved by Saudi Arabia by one million barrels per day and the reduction in Russian exports by 300 thousand barrels per day at the end of this year, the focus is on plans for 2024.

Brent crude futures rose 1.02 percent to $83.95 per barrel by 1221 GMT today, heading towards achieving gains for the third day in a row thanks to expectations of further production reduction measures from OPEC+.

Earlier, two delegates who participated in the discussions said that the new cut during the year 2024 may lead to withholding between one million and two million barrels per day of production from the market in the first quarter of 2024.

Helima Croft, an analyst at RBC Capital Markets, said that Saudi Arabia, which has reduced its production by an additional million barrels per day since July, will not want to bear further cuts alone.

She added, “We can envision the possibility of Russia and Saudi Arabia extending their cuts until the first quarter of 2024 and forming a coalition of individual producers willing and ready to make voluntary adjustments.”

The focus is on the decline in production in light of the decline in prices from about $98 in late September, concerns about weak economic growth in 2024, and expectations of a record surplus in supply.

This month, the International Energy Agency expected a slowdown in demand growth during 2024 as “the final phase of the economic recovery that followed the Covid-19 pandemic dissipates and gains from energy efficiency, expansion of electric vehicle fleets, and structural factors consolidate.”

But sources in OPEC+ said this week that the discussions were difficult, as was evident from the group’s postponement of its meeting, which was scheduled to be held on November 26.

OPEC ministers will meet only online on Thursday at 1100 GMT, with a broader OPEC+ meeting to be held at 1400 GMT.

Sources said that the postponement of the meeting from November 26 was due to the dispute over production quotas for African producers, an issue they said had been largely resolved.

The OPEC+ meeting also coincides with the opening of the United Nations Climate Change Conference (COP28) in the UAE, an OPEC member state.