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The logo of the Organization of the Petroleum Exporting Countries (OPEC) is seen outside OPEC headquarters in Vienna, Austria, in March 2022. Saudi Arabia will increase relief in the amount of oil it sends to the world after a series of cuts in OPEC’s alliance of primary producing countries have not affected prices.
UPDATE: 7:30 a.m.
LONDON >> Saudi Arabia will extend a cut in the amount of oil it sends to the world after a series of reductions by members of the OPEC+ alliance of major producing countries failed to prop up prices.
This is a smart thing to do for U. S. drivers, who have been able to refuel cost-effectively in recent months. But it’s bad news for OPEC countries, whose oil revenues help their economies and have faced setbacks in raising costs despite initial difficulties. He fears that the war between Israel and Hamas could simply be a flow of oil.
Saudi Arabia’s Energy Ministry said on its online page that its voluntary relief of 1 million barrels per day would remain in effect for the first 3 months of next year.
This was announced after the rest of the OPEC oil cartel and allied countries such as Russia met in an online assembly on global oil production.
The OPEC coalition announced that Brazil would join the bloc in January, bringing one of the world’s fastest-growing oil manufacturers into the alliance.
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LONDON >> The Saudi-led OPEC oil cartel and its allies, including Russia, will try to agree on relief in the amount of crude they ship around the world today, as costs have fallen recently despite their efforts to prop them up. up.
This is a smart thing to do for U. S. motorists, who have been able to refuel cost-effectively in recent months and whose costs at the pump would likely be sensitive to OPEC coalition decisions. But that’s bad news for OPEC countries whose oil revenues help their economies and which have struggled to keep costs high despite initial fears that the war between Israel and Hamas could also affect oil flows.
They are now struggling to reach consensus on production cuts, analysts say, on the same day that the United Nations meteorological convention opens in the United Arab Emirates, a member of OPEC.
The group postponed its meeting originally set for Sunday by four days, indicating that a new agreement will prove to be challenging, said Jorge Leon, senior vice president of oil market research for Rystad Energy.
“Despite the challenges, we still expect OPEC to reach an agreement to cut production,” he said in an analyst note. In fact, “each member country recognises the desire to reduce production costs by 2024”.
The question is how to split it among the 23 member countries, some of whom already accepted lower production targets at the last OPEC+ meeting in Vienna in June.
Another big question is whether Saudi Arabia and Russia will extend their additional voluntary cuts of 1 million barrels per day and 300,000 barrels per day, respectively, into 2024.
Russia needs to increase its oil revenues in the face of Western sanctions, but it must invest the energy revenues in its war fund against Ukraine. The Saudis want to earn around $86 a barrel to meet their spending targets, according to the most recent estimate. of the International Monetary Fund.
The Saudis are trying to fund an ambitious overhaul of the kingdom’s economy, reduce its dependence on oil and create jobs for a young population.
But the international benchmark Brent crude has stayed in the low- to mid-$80 range in recent weeks, reflecting concerns about oversupply in a weakening global economy, which could weigh on the thirst for oil for travel and industry.
Brent rose 68 cents to $83.56 a barrel today, while U.S. crude climbed 62 cents to $78.48 a barrel in electronic trading on the New York Mercantile Exchange.
Lower oil costs have allowed U. S. fuel costs to fall or remain stable since Sept. 19, AAA said. Gasoline costs on average just $3. 25 a gallon, the auto club said, about 7% less than a month ago.
But that’s still higher than when President Joe Biden took office in January 2021, when prices were averaging about $2.40 a gallon. High inflation has been a political challenge for Biden going into the 2024 election, prompting him to say Monday that efforts to improve supply chains and reduce price pressures are a priority.
White House national security spokesman John Kirby declined to address the possibility of OPEC+ reducing oil production.
“The president will continue to focus, as he has, on a healthy global market that is well-balanced and can continue to reduce the value of gas here in the United States,” Kirby told reporters at a news conference Monday. .
U.S. oil production has hit records as OPEC+ has cut back, with producers outside the group expected to keep leading global growth in oil supply next year, the International Energy Agency said in its November oil report.
For example, U. S. production averaged thirteen million barrels per day in August, an increase of more than 1 million barrels from last year, according to the most recent monthly figures from the U. S. Energy Information Administration.
Now, the risk is growing that Saudi Arabia’s production cuts could reduce OPEC’s influence over oil supplies as other countries boost their output.
“The kingdom is trying to balance the preference for higher costs by restricting supply, knowing that this will lead to a further drop in overall market share,” Leon said.
Meanwhile, fears the conflict between Israel and Hamas might spread throughout the region, creating a shock to the oil market, have not materialized, with the IEA noting that “there has been no material impact on oil supply flows from the war.”
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