OPEC and its allies hope they can stick with their existing oil production plan, resisting calls to help curb rising world energy prices to protect economic recovery when they meet later on Monday.
The group of oil producers, which has cooperated with Russia and other countries under the OPEC + banner since 2016, agreed this summer to add 400,000 barrels per day of production each month until the end of 2022.
But with oil prices trading near a three-year high of $ 80 a barrel, and other energy products like natural gas rising to record levels well beyond the equivalent price of oil, the group has faced pressure from USA and other countries to increase production. at a faster rate.
The decision could still go either way at Monday’s meeting, but people close to the discussions said Saudi Arabia, the group’s de facto leader, and other members were keen to stick with the existing plan, arguing that the Oil prices had not increased substantially in recent times. months, even as other energy commodities had risen.
The group also wants to appear stable and consistent in its decision-making, providing long-term guidance to the oil market rather than making sudden increases in production that may need to be reversed if the pandemic leads to new restrictions or closures that will affect demand this winter. . .
“While the group faces undoubted pressure, the most likely course of action is to stick to the plan,” said Amrita Sen of Energy Aspects, a consultancy. “The group wants to give signs of stability to the market and a clear path for production.”
OPEC + agreed to record production cuts last year as oil demand was falling sharply at the peak of lockdowns across the Western world. But last week, Goldman Sachs warned that global oil reserves were shrinking at a record pace.
US shale producers also warned that the oil market cannot rely on them to ramp up production quickly this time, and most companies face pressure from investors to remain cautious after last year’s price drop.
Traders and analysts say there is still some caution ahead of the meeting as further boost to output cannot be ruled out given the pressure the group has faced, particularly from the White House.
An energy crisis triggered by tight supplies of natural gas and coal, which has affected Europe but also increasingly Asia, including major oil-consuming economies such as China and India, makes the decision even more difficult for the group.
The UAE, a close ally of Saudi Arabia, is more willing than some members to ramp up production more quickly, according to people briefed on the discussions leading up to the meeting.
“If OPEC + now decides to increase production by just 400,000 b / d in November, geopolitically it will seem almost reckless,” said Bjarne Schieldrop, SEB’s chief commodities analyst in Norway.
“The result [will be] that oil prices will rise even higher in a situation where energy consumers around the world are already feeling a high level of pain over record prices for coal and natural gas. “
One option may be to bring forward production increases planned for later this year, such as increasing production by 800,000 b / d in November, but then pausing the following month.
Brent crude oil, the international benchmark, was up 0.25 percent Monday at $ 79.50 a barrel, just below a three-year high of $ 80.75 a barrel it hit last week.
The US benchmark, West Texas Intermediate, rose 0.1 percent to $ 75.97 a barrel.