By Maha El Dahan, Alex Lawler and Ahmad Ghaddar
VIENNA (Reuters) – OPEC and its allies will meet on Sunday to discuss a new deal possibly adjusting countries’ production quotas and a further cut in output, sources told Reuters, as the group faces to lower oil prices and an impending supply glut.
OPEC+, which includes the Organization of the Petroleum Exporting Countries and its Russian-led allies, pumps about 40% of global crude, meaning its policy decisions can have a major impact on oil prices.
Four sources familiar with OPEC+ talks told Reuters further output cuts were being discussed among options for Sunday’s session.
“We are discussing the whole (modifications to the agreement),” said one of the four sources.
Three out of four sources said the cuts could amount to 1 million bpd on top of existing cuts of 2 million bpd and voluntary cuts of 1.6 million bpd, announced by surprise in April and which came into effect. effective in May.
The April announcement helped lift oil prices from around $9 a barrel to above $87, but they quickly retreated under pressure from worries about global economic growth and demand. On Friday, international benchmark Brent settled at $76. [O/R]
If approved, the new reduction would bring the total volume of reductions to 4.66 million bpd, or about 4.5% of global demand.
Typically, production cuts take effect the month after they are agreed, but ministers could also agree to later implementation. They could also decide to keep production stable.
OPEC+ ministers will start meeting from 11:00 a.m. (09:00 GMT) on Sunday in Vienna and have a plenary meeting from 12:00 p.m., sources familiar with the latest schedule said.
Saudi Arabia’s Energy Minister Prince Abdulaziz said last week that investors who short the price of oil or bet on lower oil prices should “be careful”, which many market watchers interpreted as a warning of further supply cuts.
Three OPEC+ sources also said the group will address the issue of baselines for 2023 and 2024, from which each member makes cuts.
These talks have already become contentious.
West African countries such as Nigeria and Angola have long been unable to produce in line with their targets, but have resisted lower baselines because new targets could force them to make real cuts .
By contrast, the UAE has pushed for higher baselines based on its growing production capacity, but that would mean its share of overall reductions could decline.
Western nations have accused OPEC of manipulating oil prices and undermining the global economy due to high energy costs. The West has also accused OPEC of siding too much with Russia despite Western sanctions over Moscow’s invasion of Ukraine.
In response, OPEC insiders and watchers said the West’s money printing over the past decade has driven inflation and forced oil-producing nations to act to maintain the value of their main oil. export.
Asian countries such as China and India bought the lion’s share of Russian oil exports and refused to join Western sanctions against Russia.
OPEC has denied media access to its headquarters to journalists from Reuters and other news outlets.
(Reporting by Ahmad Ghaddar, Alex Lawler, Maha El Dahan and Julia Payne; Writing by Dmitry Zhdannikov; Editing by Hugh Lawson and Emelia Sithole-Matarise)