LONDON – Five sources in the OPEC + alliance said that the group is likely to keep oil production quotas unchanged for the month of October at a meeting scheduled for tomorrow, Monday, although some sources did not rule out a slight production cut to support prices that have fallen due to fears of an economic slowdown. .
The members of the Organization of the Petroleum Exporting Countries and their allies, including Russia, are meeting in the framework of what is known as the OPEC + group, at a time when demand is facing adverse conditions, in addition to the possibility of increasing supplies thanks to the return of Iranian crude to the markets in the event that Tehran concludes an agreement with world powers on its nuclear activities.
Brent crude fell to around $93 a barrel from $120 in June, amid fears of an economic slowdown and recession in the West.
Iran is expected to add 1 million barrels per day to global supplies, equal to 1 percent of global demand, if sanctions are eased, although prospects for a nuclear deal appeared more murky on Friday.
Last month, Saudi Arabia, the largest producer in OPEC, indicated the possibility of cutting production to counter what it considers an exaggerated decline in oil prices.
Evidence from the physical market suggests that supplies remain tight, with many OPEC countries producing below target and new Western sanctions threatening energy supplies from Russia.
Russia said last week that it would stop supplying countries that support the idea of capping Russian energy supplies in the midst of the military conflict in Ukraine.
It has also reduced again its shipments of gas to Europe, which is likely to suffer from a new rise in the prices of this important source of energy.
Five OPEC+ sources said on Sunday that Monday’s meeting could lead to an extension of current production policies. However, two out of five sources said the group may discuss a small 100,000 bpd cut to bring production quotas back to August levels. This will give the market a “sense of a symbolic cut”, one of the sources said.
And the newspaper “The Wall Street Journal” quoted informed sources today, Sunday, that Russia has expressed opposition to reducing oil production at the present time, and that it is likely that OPEC and its allies, a group known as OPEC +, will maintain its production level when it meets tomorrow, Monday.
The Wall Street Journal report said Russia is concerned that production cuts may signal to oil buyers that crude supply is outstripping global demand.
Last week, the Group of Seven agreed to cap Russian oil prices, but offered few new details of the plan aimed at curbing the revenues that fund Moscow’s war in Ukraine while keeping crude flowing to avoid price hikes.