OPEC+ agreed to make 1 million barrels a day of additional oil-supply cuts to go alongside Saudi Arabia’s much-anticipated extension of its voluntary reduction of the same size.
Members have an agreement principle that now goes to a vote, delegates said, asking not the be named because the information was private. The deal fulfills what delegates had said were Riyadh’s goals for the meeting. More than a week of preparatory talks appeared to have overcome internal disagreements over some nations’ production quotas.
“If those numbers get confirmed it shows OPEC+ wants to keep their hands on the oil wheel,” said Giovanni Staunovo, an analyst at UBS Group AG. The alliance is “continuing to apply a proactive stance considering likely seasonally weaker demand at the start of 2024.”
Oil rose 1.4% to $84.24 a barrel as of 3:10 p.m. in London.
Saudi Arabia, which has been making an extra voluntary cut of 1 million barrels a day since July, was pressing the rest of the Organization of Petroleum Exporting Countries and its allies to join this effort after crude prices fell by more than 10% from their September high. A deeper collective reduction could stave off a renewed oil surplus predicted for early next year.
A new group-wide OPEC+ cut of 1 million barrels a day could actually be only half as big in real terms, Amrita Sen, director of research at consultant Energy Aspects Ltd., told Bloomberg television before the meeting. That’s because some countries are already pumping below their targets, she said.
Key details on the cuts are still missing, Staunovo said. It was not immediately clear how the cuts would be distributed between members, nor how Russia’s 300,000 barrel-a-day export cut would factor into the new totals.
The outlook for oil has weakened over the past two months amid plentiful supplies and a darkening economic backdrop. Price could fall even further next year, when forecasters including the International Energy Agency anticipate a sharp slowdown in demand growth.