VIENNA, Austria — Members of the OPEC+ cartel of oil-producing nations are likely to maintain current output cuts at their biannual meeting Sunday, analysts told AFP, opting for caution in the face of geopolitical uncertainties.
Analysts said they expected the status quo to be upheld at the June 2 gathering, where 22 energy ministers will meet virtually.
Prices for the black gold have changed little since the last meeting in November, increasing only by 3 to 4 percent.
“I expect OPEC+ to roll over the current quotas,” Tamas Varga, analyst at PVM Energy, told AFP.
“The supply-demand balance suggests that no change is needed, otherwise prices would fall.”
READ: OPEC+ keeps output policy steady as oil nears $90 a barrel
After the last meeting in November, several countries including Saudi Arabia and Russia said they would further slash production to prop up volatile prices.
Giovanni Staunovo, an analyst at UBS, told AFP that the “eight member states with voluntary production cuts are likely to extend them.”
The OPEC+ alliance — comprising the 13-member Organization of the Petroleum Exporting Countries and its 10 partners — has a reserve capacity of nearly six million barrels per day, according to the International Energy Agency (IEA).
High interest rates curb demand for crude
Varga said the “biggest issue is to credibly convince the market that those with lax compliance will make amends in coming months”.
READ: Global oil demand seen to grow by 1.9 million bpd in 2024
High interest rates across the world tend to curb demand for crude oil, with fears of a rebound in inflation in the United States and skepticism around China’s economic recovery dampening confidence.
And all global discussions now come under the shadow of geopolitical tensions in the Middle East.
“The idea is that we don’t really know where we are going, so we don’t change anything,” said Philippe Sebille-Lopez, a specialist in geopolitical energy issues.
More cuts to boost prices would likely come up against resistance from the smaller members of the group, who do not want to see their oil revenues drop.
The alliance also fears losing market share to other producing countries outside OPEC+, such as the United States and Canada.
Due to cuts and political upheavals, OPEC and its partners now produce 41.5 million barrels per day, less than half of the world’s crude production, according to the latest report by the IEA — the lowest share it has held since 2016.