Oil prices continued to slide on Monday with Brent crude falling below $80 per barrel ahead of the Organization of the Petroleum Exporting Countries (OPEC+) meeting later this week. The OPEC+ meeting is expected to agree to restrict oil supplies into next year.
The OPEC+ meeting was postponed to November 30 as two OPEC members, Nigeria and Angola, were reportedly pushing for higher output allowance, according to Reuters. Both these countries were allocated lower allowances in June after failing to meet their quotas earlier. Saudi Arabia and Russia are already voluntarily reducing output to maintain high global prices.
The disagreement among OPEC+ members underscores the challenge of balancing member interests among the group. Oil producers stand to benefit from higher oil prices, but at the same time want to sell oil as much as possible to increase their revenues.
According to analysts at Goldman Sachs cited by Reuters, oil exports by OPEC countries have fallen to 1.3 million barrels every day, which is below the levels seen in April. The analysts commented, “We still expect an extension of the unilateral Saudi and Russia cuts through at least 2024Q1 [the first quarter of next year], and unchanged group cuts, although a deeper group insurance cut is likely on the table.”
However, according to traders and data compiled by Reuters, the UAE could increase the exports of its crude oil early next year while higher stockpiles of crude oil in the U.S. could put downward pressure on oil prices.
Meanwhile, the International Energy Agency (IEA) expects that there may be a slight surplus in oil supplies next year even if OPEC+ nations extend their production cuts into next year.
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