Opec+ rolls over existing oil output policy

The Organization of the Petroleum Exporting Countries alliance (Opec+) has agreed to roll over its existing oil output policy, two Opec+ sources said on Sunday (Dec 4).

The decision came two days after the Group of Seven (G7) nations agreed a price cap on Russian oil.

Opec+ met to review oil production levels for 2023 as the global market is roiled by uncertainty over Chinese demand and Russian supply.

While Saudi Arabia and its partners had considered discussing additional output cuts, the 23-nation group was widely expected to keep supply levels unchanged as it gauges the impact of a hefty two million barrel a day reduction announced at its last gathering in October.

The coalition has to contend with an especially volatile outlook, as European Union sanctions are about to come into effect on crude exports from Opec+ member Russia. At the same time, China is tentatively easing the Covid measures that have eroded consumption in the world’s biggest oil importer.

A decision to hold the gathering online – rather than at Opec’s Vienna headquarters as originally planned – has reinforced expectations that the producers will maintain the status quo. Still, Saudi Energy Minister Prince Abdulaziz bin Salman has a reputation for last-minute surprises.

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Opec is intent on achieving price stability and balancing oil markets, Iraqi Oil Minister Hayyan Abdul Ghani said in a statement. The group’s members are committed to current output targets that continue until the end of 2023, Abdul Ghani said after joining an Opec ministerial meeting on administrative matters.

Kuwait’s state energy company said customers are reluctant to increase oil imports next year, signalling that consumption is being suppressed by global economic weakness.

“We’re really nervous about where demand is going over the next few months and the next year, especially if there is a recession,” Sheikh Nawaf Al-Sabah, chief executive officer of Kuwait Petroleum Corp., said to Bloomberg TV late on Friday (Dec 2). “We’re talking to our customers. They’re saying that they either require the same amount of oil, or they’re asking for slightly less next year.”

The Opec member exports about two million barrels a day of crude, most of it to Asian countries such as China, South Korea, Japan and India.

On Friday, G7 nations and Australia agreed a US$60 per barrel price cap on Russian seaborne crude oil in a move to deprive President Vladimir Putin of revenue while keeping Russian oil flowing to global markets.

Moscow said it would not sell its oil under the cap and was analysing how to respond. REUTERS, Bloomberg