Crude oil prices have fallen nearly 20% since September, prompting major oil-producing countries to consider further tightening of supply at a meeting this week.
Brent crude oil prices approached $98 a barrel in late September. However, they are now hovering around $79. Concerns about weak demand and a possible supply glut next year have weighed on prices, despite conflict in the Middle East and production cuts by the Organization of the Petroleum Exporting Countries and its allies (OPEC+).
After a series of cuts from the end of 2022, Saudi Arabia, Russia and other members of OPEC+ have pledged to withdraw 5.16 million barrels of oil per day, equivalent to 5% of global oil demand. This figure includes 3.66 million barrels from OPEC+ countries and voluntary reductions by Saudi Arabia and Russia.
Reuters quoted an OPEC+ source as saying that the current cuts may not be enough and the group would analyze the possibility of further cuts. Two other Reuters sources also confirmed this.
"OPEC+ is not happy to see increasing market volatility ahead of its next meeting, although fundamentals remain strong. Ministers are likely to discuss what further policies are needed to stabilize the trend," a Reuters source said.
OPEC+ will meet on November 26. The group's current production cuts run through 2024.
Many OPEC+ members now rely on oil as a major source of government revenue. However, analysts say that if oil production continues to decline, Saudi Arabia’s economy is likely to contract this year.
Crude oil prices continued to fall last week, despite OPEC’s monthly report saying that oil market fundamentals remain strong, and the organization kept its 2024 demand forecast unchanged at a high level.
In contrast, the International Energy Agency (IEA) last week lowered its oil demand forecast for next year. They also warned that the market is likely to be oversupplied in the first quarter of 2024.
Ha Thu (according to Reuters)
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