The Zhitong Finance app learned that according to media quoting OPEC+ participants, Saudi Arabia requested other OPEC+ member states to reduce oil production quotas to support the global market, but was opposed by some member states.

According to reports, Saudi Arabia, the leader of OPEC+, has been unilaterally cutting production by 1 million b/d since July, and is now seeking further support from other member countries of the organization. As Saudi Arabia puts forward this proposal, OPEC+ is facing difficult negotiations. The OPEC+ meeting had to be postponed for four days until November 30 due to the refusal of Angola and Nigeria to cut production quotas for 2024 set at the previous meeting in June.

Delegates at the meeting said that before last weekend, oil-producing countries were close to reaching a compromise on this matter, but no final agreement had been reached until this Monday.

Over the past two months, crude oil prices have fallen 17% due to sufficient supply and a weak economic environment. This puts pressure on OPEC+ to interfere in the crude oil market. Meanwhile, the crude oil market is likely to weaken further in early 2024, and institutions, including the International Energy Agency (IEA), predict a new oversupply at that time.

Eurasia Group analysts led by Raad Alkadiri said in a report: “As fundamentals weaken and market sentiment falls, OPEC+ may need to announce another formal production cut.” They added that any production cut below 1 million b/d could cause oil prices to drop to a low of $70 per barrel.

Currently, in addition to Saudi Arabia voluntarily cutting production by an additional 1 million b/d, Russia has also reduced crude oil exports by 300,000 b/d. Both restrictions will continue until the end of this year. Most analysts expect Saudi Arabia and Russia to extend these restrictions until 2024.

Market observers such as J.P. Morgan have pointed out that OPEC+ may cut production further. Some market participants, such as Commerzbank and hedge fund manager Pierre Andurand, warned that if OPEC+ does not cut production further, oil prices may fall further.

OPEC+ production cuts may win back the bulls, but this may be difficult to coordinate. Iraq, Russia, and Kazakhstan have recently been raising their quotas, while other member states — such as those in Africa — have lost too much production capacity to cut further. What is also unclear is whether the UAE, a major OPEC+ member country, will face pressure to give up increasing production. At the OPEC+ meeting held in June, the country was approved to increase production capacity by 200,000 b/d from January next year.