Deeper cuts off Opec+ agenda for now M

There is a backdrop of growing concern about oil demand

inisters from the Organisation of Petroleum Exporting Countries and their allies (Opec+) are gathering in Abu Dhabi with deeper production cuts off the agenda for now, but with a backdrop of growing concern about the strength of oil demand as the global economy slows.

Crude has lurked in the low $60s for most of the summer as escalating tensions between the US and China and increasing fears of a looming recession prompted downgrades to oil-demand forecasts. That’s too cheap to cover the budgets of many nations in the cartel, notably Saudi Arabia, but the group gave no indication that it will try to push prices higher at the meeting of its Joint Ministerial Monitoring Committee today.

Russian minister

“It’s not the goal of the JMMC to generate new proposals all the time,” Russian Energy Minister Alexander Novak told reporters in Abu Dhabi yesterday, when asked about the possibility of deeper cuts. “We aim to monitor the current market situation and compliance with the agreement, and we’ll discuss precisely those questions.”

Opec’s monthly oil-market report, published yesterday, highlighted slowing demand growth, rising supplies and the risk of a “relapse” into surplus. Expected demand for Opec crude next year of 29.4 million barrels a day is below current

production of 29.7 million, suggesting further cuts could be needed.

That’s a sign of the uphill battle facing the group, even as Iran’s exports have been slashed by US sanctions, Venezuela’s output has slumped amid an economic crisis, and Saudi Arabia has had to cut three times deeper than initially planned to keep prices supported at $60.

While the group’s main power-brokers see no need for discussion of deeper curbs at the moment, they acknowledge that the situation next year needs to be reviewed.