Members of Petroleum Exporting Countries (OPEC) are scheduled to meet today, Wednesday mulling an output cut of up to two million barrels per day in a bid to prop up slumping prices.
The 13 members of the Organization (OPEC), led by Saudi Arabia, and their 10 allies headed by Russia will hold their first in-person meeting since March 2020 at the group’s headquarters in Vienna.
If implemented, it would be the first such major cut since a landmark curb on production at the start of the Covid pandemic.
The group agreed last month on a small, symbolic cut of 100,000 bpd from October, the first in more than a year.
After soaring close to $140 per barrel in the aftermath of Russia’s invasion of Ukraine in late February, oil prices have dropped below the $90 mark.
According to the UBS bank, a cut of at least 500,000 bpd would be necessary to stop the price plunge.
In anticipation of Wednesday’s meeting, oil prices jumped further on Tuesday, with Brent above $90 and WTI around $86, though still far below their March peak.
Consumer countries have pushed for OPEC+ to open taps more widely to bring down prices — calls that the group has largely ignored.
US President Joe Biden made a controversial trip to Saudi Arabia in July in part to convince the kingdom to loosen the production taps. The trip saw Biden meet Crown Prince Mohammed bin Salman despite his promise to make Riyadh a “pariah” following the 2018 killing of journalist Jamal Khashoggi.
“Any cut would be unwelcome as it’s not the right time for cutting oil supplies to push prices higher,” said Ipek Ozkardeskaya, a Swissquote analyst.
“The global energy crisis, soaring inflation and looming recession already worry the Western leaders,” she said ahead of the Vienna gathering.
“Knowing that Russia is willing to cut output, the move could also be perceived as another escalation of the geopolitical tensions” between Moscow and the West.
Observers have cast doubt on how much more OPEC+ could possibly pump, with some of its members already struggling to meet quotas.
