OPEC+ may be considering an even larger cut than previously reported—at up to 2 million bpd, anonymous delegates told media on Tuesday.
As OPEC+ prepares to meet this Wednesday to discuss its oil production plans for November, it is assessing the state of the oil markets—and the current state of oil prices which began to fall in June near levels that some OPEC+ members could find unacceptable.
Despite the growing worry of a severe global recession and the impact that would have on oil demand, the OPEC+ group feels that the markets are largely ignoring market fundamentals. Nevertheless, OPEC+ is considering a hefty production cut—an even heftier one that it was reportedly considering previously.
The first rumor was that Russia was pushing OPEC+ to implement a 1 million bpd production cut. The group was later reportedly considering a production cut between 500,000 bpd and 1 million bpd. Shortly after, yet another source said that OPEC+ was considering an even larger cut of more than 1 million bpd. The latest news from OPEC+ delegates suggests that the group is considering yet another option: a 2 million bpd cut.
Aside from current oil prices, another factor in determining OPEC+’s production plans for November is the group’s available spare capacity—without which the group would be unable to control the market in the future.
An output cut of that magnitude would come shortly after the United States ends its 1 million bpd release of crude oil from its emergency stockpiles.
Crude oil prices have risen over the last few days on the prospect of such an output cut, with Brent now trading above $91.
By Julianne Geiger for Oilprice.com
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