OPEC+ Prepares for December Meeting Amid Price Challenges

The OPEC+ coalition is set to convene virtually on December 5, marking its third consecutive online session. While in-person meetings were previously held at the Vienna headquarters, logistical and geopolitical factors seem to favor the virtual format.

Key Highlights and Agenda

1. Virtual Meeting Format:
   • No formal invitations or plans for a Vienna gathering have been issued, confirming the shift to an online session.
   • This continues a trend of virtual meetings adopted during the pandemic and maintained for practicality amidst strained geopolitical dynamics.
2. Current Oil Price Concerns:
   • Crude oil prices are hovering at approximately $75 per barrel, well below the fiscal breakeven levels for many OPEC nations.
   • For Saudi Arabia, the IMF estimates a required price of $100 per barrel to sustain its extensive economic reforms.
3. Production Plans and Challenges:
   • OPEC+ is juggling three major production cuts:
     • A formal output cap of 39.725 million barrels per day (bpd).
     • A voluntary reduction of 1.7 million bpd extending through 2025.
     • An additional 2.2 million bpd cut, slated for gradual reversal starting January 2024.
   • Weak global demand, particularly from China, and rising U.S. oil supplies have contributed to a 15% decline in oil prices since July, intensifying the coalition’s balancing act.
4. Focus of Discussions:
   • The coalition will likely address whether to adhere to the postponed timeline for restoring the 2.2 million bpd or implement further adjustments to stabilize prices.

Market Context

OPEC+ faces a delicate balancing act between supporting member economies and avoiding excessive market tightening that could hinder global recovery. The meeting outcomes will be critical in setting the tone for 2024 oil market dynamics, particularly as external pressures like weak demand and geopolitical tensions persist.