OPEC+ to discuss extending oil cuts or gradually raising output

OPEC+ members will consider whether to extend existing oil cuts for three to four months or to increase output gradually from January during their two days of talks that start on Monday, OPEC+ sources told Reuters. Officials from the Organization of the Petroleum Exporting Countries, Russia and others, a group known as OPEC+, held an initial round of talks on Sunday before formal discussions began but failed to reach agreement on policy for 2021.

OPEC+ had been due to ease existing production cuts by 2 million barrels per day (bpd) from January 2021, but a second coronavirus wave has reduced demand for fuel around the world, prompting a rethink among members of the group. OPEC+ is now considering extending the existing cuts of 7.7 million bpd, about 8% of global demand, into the first months of 2021, a position supported by OPEC’s de-facto leader Saudi Arabia and other major producers in the group, sources said.

Preliminary consultations on Sunday between Saudi, Russian and other key ministers did not agree on strategy. Sources have said talks were now focusing on extending cuts by three to four months or increasing output gradually from January, the position supported by Russia. Kremlin spokesman Dmitry Peskov said differences between Russia and OPEC were not as severe as in early 2020, when disagreements led to a collapse in talks and a surge in output.

Oil prices, which were down 2% at $47 a barrel by 0955 GMT, could fall as much as 10% if OPEC failed to roll over cuts, Deutsche Bank said in a note. Oil had a bull run last week triggered by hopes for a virus vaccine and expectations of a cut rollover.

OPEC+ to discuss extending oil cuts or gradually raising output, sources say, Reuters, Nov 30