The OPEC meeting ended with ministers approving additional production cuts for Q1 2020, two delegation sources told Russian news outlet TASS on Thursday afternoon.
The cuts for the OPEC+ group which currently stand at 1.2 million bpd, will be increased to 1.7 million bpd, the sources said, per the monitoring committee’s earlier recommendation, which OPEC today approved.
The meeting now in the rearview, all that remains are the bilateral consultations.
Rumors surfaced earlier that Saudi Arabia and Venezuela had proposed the 500.000 bpd increase, but a Saudi official later denied that rumor, saying that there was “No deeper cut being advocated by the kingdom.”
Deepening the cuts by 500,000 bpd should not at all be painful for the group—indeed, it will hardly be a cut at all--as they are currently overcomplying as a whole with the current level of the cuts anyway. Saudi Arabia, who is rumored to have had enough of OPEC—and OPEC+’s—cheating members, has effectively carried the group to significant overcompliance month after month, making up for noncompliant members including Iraq, Russia, and Nigeria.
The ministerial meetings were scheduled to take place on December 5 and 6 in Vienna, with analysts divided as to how the meetings would play out.
Oil prices were up moderately on Thursday afternoon, and by 2:54pm EST, WTI was trading up $0.10 (+0.17%) at $58.53 per barrel, with the Brent benchmark trading up $0.44 (+0.70%) at $63.44 per barrel.
The group will now be faced with divvying up the extra production cuts, and getting individual members to stick with whatever is agreed upon at the meetings.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
- Saudi Arabia Threatens To Flood Oil Markets If OPEC Members Don’t Cut Output
- Oil Soars On Crude Inventory Draw
- Iraq: The Next Great Threat To Global Oil Markets
Consequently, its impact on oil prices will be zilch. Only an end to the trade war will stimulate the global oil demand and push oil prices up and this doesn’t seem to be happening soon given President Trump’s failure to accept the obvious, namely that he lost the war with China.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London