OPEC Forecasts Demand to Fall 7% by 2023
The biggest producers in OPEC+ aren’t pushing for deeper oil-supply cuts when the group meets next month, according to delegates across the coalition.
The Organization of Petroleum Exporting Countries and its allies are more likely to stick to their current output targets and encourage members to comply more fully, the delegates said, asking not to be identified because the talks are private. The producers, representing about half of global supply, meet in Vienna on Dec. 5 and 6.
OPEC is anticipating a supply glut in the first half of next year and prices are already lower than most members need to balance their budgets. The group could face further pressure in 2020 as U.S. shale-oil supplies boom and global demand increases slowly. Morgan Stanley, Commerzbank AG and Rystad Energy AS have said OPEC and its allies need to cut deeper in response.
Last month, officials from the organization signaled they’re prepared to do this, with Saudi Energy Minister Prince Abdulaziz bin Salman -- who represents OPEC’s biggest and most influential member -- saying it was his “job” to thwart any surplus. Yet the group hasn’t started work on the different scenarios to outline the range of deeper cutbacks ministers would consider when they meet in early December, the delegates said.
A key obstacle to any new agreement is that some countries haven’t yet delivered the cutbacks they agreed to at the start of the year, when OPEC+ pledged to collectively reduce supplies by 1.2 million barrels a day. Iraq and Nigeria have mostly increased output instead of delivering their promised curbs.
Another difficulty is in securing support from OPEC’s principal ally, Russia, which is under less budgetary pressure to maintain high oil prices and has sounded cautious about stronger intervention. Energy Minister Alexander Novak said on Wednesday that oil prices of US$60 a barrel show the market is stable, and producers will keep monitoring the situation into early 2020. Russia has also exceeded its output curbs pledge for several months this year.