① According to the latest news, Saudi Arabia is calling on other members of the Organization of Oil Producers to cut production, but no agreement has yet been reached; ② Therefore, the OPEC meeting has also been postponed from last weekend to this Thursday; ③ Market participants expect that oil prices may still fall without further cuts in production, but it is not easy to lead to production cuts.
Financial News Agency, November 28 (Editor Shi Zhengcheng) Due to Saudi Arabia and OPEC member states not being able to agree on oil production quotas, the Ministerial Supervisory Committee (JMMC) meeting scheduled to be held last weekend, as well as the OPEC and OPEC+ Ministerial Meeting (ONOMM), have been postponed from last weekend to this Thursday (November 30) and held online instead.
According to the latest news for Monday's European and American session, the standoff between OPEC's “big brother” Saudi Arabia and member states continues.
According to people familiar with the matter, in addition to requiring member states to accept the 2024 production quota, Saudi Arabia is also lobbying other member states to reduce production capacity quotas to boost oil prices, which have fallen rapidly recently, but this move has been resisted by some member countries.
(Oil distribution has declined nearly 20% since mid-September, source: TradingView)
From Saudi Arabia's perspective, OPEC's largest oil producer has been unilaterally cutting production by 1 million b/d since July of this year, so it is now also seeking “something” for OPEC and OPEC+ member countries.
People familiar with the matter revealed that negotiations between the parties were progressing towards reaching a compromise before the end of last week, but no agreement has yet been reached. For the 23 OPEC+ member countries, apart from the decline in oil prices over the past two months, global uncertainty in the global economy and the continued increase in production in countries outside the organization have also made it quite difficult for the Union of Oil Producers led by Saudi Arabia and Russia to interfere in the policy of interfering with oil prices.
Production and stock reduction expectations have been added, but it is very difficult to achieve
According to last week's report, the African countries Angola and Nigeria previously opposed the 2024 quota reduction set in June, and did not discuss further production cuts.
(The new 2024 quotas and changes previously agreed upon)
Specifically, the June meeting also laid the groundwork for today's conflict. The announcement at the time mentioned that Angola's 2024 production plan needs to be certified by the next OPEC and OPEC+ Ministerial Meeting, while the production capacity of Nigeria and the Congo may be adjusted to the “average production capacity that can be achieved by 2024” in these two countries.
For oil-producing countries, oil prices and production are also an important part of finance. For reference, Nigeria's Minister of Budget and National Planning Atiku Bagudu said on Monday that the country raised its 2024 budget from 26 trillion naira to 27.5 trillion naira (roughly US$32.76 billion). The basis for this adjustment is that the country raised the oil price forecast by 4 US dollars/barrel to 77.96 US dollars, and also expects the exchange rate of the US dollar to the naira to rise from 1 to 700 to 1 to 750.
Currently, in addition to Saudi Arabia's voluntary additional production cuts, Russia has also cooperated to reduce exports by 300,000 b/d. Currently, the market also generally expects that the “additional voluntary production reduction measures” of these two countries will continue until next year.
Although OPEC's production reduction expectations are still chaotic, commodity analysts including J.P. Morgan Chase, German Commercial Bank, and Pierre Andurand, the “god of crude oil trading,” have raised expectations of “additional production cuts” and warned that if OPEC chooses to maintain the status quo, oil prices may fall further.
However, from a realistic point of view, it is not easy to persuade member states to continue cutting production. Production data shows that Russia, Kazakhstan, and Iraq have recently exceeded their quotas. At the same time, as mentioned earlier, African countries are already quite dissatisfied with next year's quota reduction, and it is difficult for them to accept further production cuts. At the same time, there is uncertainty about whether the UAE, which was approved at the June meeting to increase production by 200,000 b/d next year, will face pressure to maintain quotas.