A production cut by more than 1 million barrels a day would be the biggest since the Covid-19 pandemic, reports Asian Lite Newsdesk
The Organisation of the Petroleum Exporting Countries (OPEC) Plus is considering an oil output cut of more than a million barrels per day (bpd) to revive plunging prices when it meets in Vienna this week.
If moved forward, it would be the biggest production cut yet since the COVID-19 pandemic.
But a final decision on the size of the cuts won’t be made until ministers gather in Vienna on Wednesday, according to reports citing OPEC+ delegates as saying.
The OPEC+ is set to hold its meeting in Vienna for the first time since the COVID-19 pandemic began in 2020.
“The 45th Meeting of the Joint Ministerial Monitoring Committee (JMMC) and the 33rd OPEC and non-OPEC Ministerial Meeting will take place in person at the OPEC Secretariat in Vienna, Austria, on Wednesday, 5 October 2022,” the statement reads.
According to the statement, the OPEC Secretariat is looking forward to welcoming all ministerial delegations to Vienna. “These upcoming meetings will be the first in-person ministerial meetings since March 2020,” the statement added.
This meeting came amid the rise in oil prices which is more than 1 per cent on Tuesday after declining to a nine-month low a day earlier.
During the last trading session, the prices of oil had dropped to the lowest levels under the pressure of a surging dollar that makes greenback-denominated crude oil more expensive for buyers using other currencies, and rising interest rates, which might trigger a recession and lower oil demand.
Investors are awaiting the decision from Wednesday’s meeting, as oil prices have recently tumbled over fears of an economic slowdown and demand contraction. Both the West Texas Intermediate (WTI) and the Brent crude have dropped from peaks of over $120 a barrel in June to about $80 a barrel.
In the previous two trading sessions, Brent plunged 7.1 per cent while US West Texas Intermediate (WTI) crude slumped 8.1 per cent. Officials from major producers reacted to the past days of declines by indicating they may take action to keep price stability.
“Crude oil prices are showing signs of stabilising after the swift decline towards a nine-month low with markets considering the prospects of further action by the Opec+ members at their October 5 meeting, as the oil cartel hinted at their discomfort with declining crude prices,” said Sugandha Sachdeva, vice-president for commodity and currency research, Religare Broking.
The group has been meeting online on a monthly basis and wasn’t expected to arrange an in-person gathering until at least the end of this year.
The last 32nd OPEC and non-OPEC Ministerial Meeting, which was a video conference, took place on September 5.
“The Meeting noted that higher volatility and increased uncertainties require the continuous assessment of market conditions and a readiness to make immediate adjustments to production in different forms if needed and that OPEC+ has the commitment, the flexibility, and the means within the existing mechanisms of the Declaration of Cooperation to deal with these challenges and provide guidance to the market,” according to the press release.
OPEC+, which comprises the Organization of the Petroleum Exporting Countries (OPEC) and its allies, slashed oil production massively in 2020 when the Covid-19 pandemic hammered demand. The group began to unwind the output cuts in July 2021 as the market improved.
At its last ministerial meeting held virtually in early September, OPEC+ announced a small production cut of 100,000 barrels per day for October, its first output cut in over a year, to bolster the sliding crude prices.