The Atlanta Journal-Constitution
OPEC nations tackle oversupply of oil
The world may be heading for an even greater oversupply of oil, and that possibility — which could drive down fuel and energy prices — is hanging over members of the OPEC cartel as they head into negotiations today. The oil-producing nations will decide whether to stick with production cuts they’ve endured for the past three years, relax them or deepen them in the hopes of propping up prices.
The situation
The oil-producing nations are negotiating through a tangle of tensions driving members in competing directions.
Saudi Aramco’s stock market debut, which will get off the ground today when the state-run oil giant prices its shares, has put Saudi Arabia in a precarious position as it bets on what volume of oil production will hit a sweet spot for prices, with the added pressure of considering the interests of its shareholders.
Why it’s happening
The Saudis already bear the burden of the largest share of OPEC’s production cuts. But some nations, such as Iraq, have been ignoring the agreement and producing more than their allotted amount.
Meanwhile, there is the wild card of OPEC nonmembers. Russia has indicated it wants its production recalculated in a way that’s in line with OPEC nations. This could enable it to produce more oil.
And more oil is coming from the U.S., Canada, Brazil, Norway and Guyana, which will more than make up for any drop in production, according to IHS Markit.
What’s ahead
The dynamic to watch will be if Russia and Saudi Arabia reach agreement on production levels next year, said Heather Heldman, managing partner at Luminae Group, a geopolitical intelligence firm.