OPEC Oil Production Cuts 11/30 07:00
The OPEC oil cartel led by Saudi Arabia and allied producers including
Russia will try to agree Thursday on cuts to the amount of crude they send to
the world, with prices having tumbled lately despite their efforts to prop them
LONDON (AP) -- The OPEC oil cartel led by Saudi Arabia and allied producers
including Russia will try to agree Thursday on cuts to the amount of crude they
send to the world, with prices having tumbled lately despite their efforts to
prop them up.
That's been a good thing for U.S. drivers, who have been able to fill their
gas tanks for less money in recent months and whose costs at the pump can be
sensitive to moves by the OPEC+ coalition. But it's bad news for OPEC+
countries whose oil income props up their economies and who have faced setbacks
in keeping prices up despite initial fears that the Israel-Hamas war could
affect oil flows.
Now, they are struggling to come to a consensus on production cuts, analysts
say, on the same day the U.N. climate conference kicks off in the United Arab
Emirates, an OPEC member.
The group postponed its meeting originally set for Sunday by four days,
indicating that a new agreement will prove to be challenging, said Jorge Leon,
senior vice president of oil market research for Rystad Energy.
"Despite the challenges, we still expect OPEC+ to reach an agreement to
reduce production," he said in an analyst note. That's because "every member
country acknowledges the need to reduce output to support prices into 2024."
The question is how to split it among the 23 member countries, some of whom
already accepted lower production targets at the last OPEC+ meeting in Vienna
Another big question is whether Saudi Arabia and Russia will extend their
additional voluntary cuts of 1 million barrels per day and 300,000 barrels per
day, respectively, into 2024.
Russia wants more oil revenue as it faces Western sanctions but seeks to
pour energy earnings into its war chest against Ukraine. The Saudis have to
earn nearly $86 per barrel to meet their planned spending goals, according to
the latest estimate from the International Monetary Fund.
The Saudis are trying to fund an ambitious overhaul of the kingdom's
economy, reduce its dependence on oil and create jobs for a young population.
But the international benchmark Brent crude has stayed in the low- to
mid-$80 range in recent weeks, reflecting concerns about oversupply in a
weakening global economy, which could weigh on the thirst for oil for travel
Early Thursday, Brent rose 8 cents to $82.96 a barrel, while U.S. crude rose
by 11 cents to $77.97 a barrel in electronic trading on the New York Mercantile
Lower oil prices have allowed U.S. gas prices to fall or stay steady since
Sept. 19, AAA said. Gas is averaging just below $3.25 a gallon, the motor club
said, down about 7% from a month ago.
But that's still higher than when President Joe Biden took office in January
2021, when prices were averaging about $2.40 a gallon. High inflation has been
a political challenge for Biden going into the 2024 election, prompting him to
say Monday that efforts to improve supply chains and reduce price pressures are
White House national security spokesman John Kirby declined to address the
possibility of OPEC+ reducing oil production.
"The president is going to keep focusing, as he has been, on a healthy
global market that's properly balanced and that can continue to bring the price
of gasoline down here in the United States," Kirby told reporters at a briefing
U.S. oil production has hit records as OPEC+ has cut back, with producers
outside the group expected to keep leading global growth in oil supply next
year, the International Energy Agency said in its November oil report.
For instance, daily production in the U.S. averaged 13 million barrels a day
in August, an increase of more than 1 million barrels from a year ago,
according to the latest monthly figures from the U.S. Energy Information
Now, the risk is growing that Saudi Arabia's production cuts could reduce
OPEC's influence over oil supplies as other countries boost their output.
"The kingdom is balancing the desire to keep prices high by limiting supply
with the knowledge that doing so will lead to a further drop in overall market
share," Leon said.
Meanwhile, fears the conflict between Israel and Hamas might spread
throughout the region, creating a shock to the oil market, have not
materialized, with the IEA noting that "there has been no material impact on
oil supply flows from the war."