MOSCOW, Sep 2 — PRIME. The OPEC + alliance at its meeting on Monday is likely to decide to leave oil production quotas unchanged. This was reported to Reuters by three informed sources. However, other sources do not rule out that the cartel and its allies will cut production to support prices.
The meeting of the cartel and its allies, including Russia, will take place at a time when demand is under pressure and Iranian oil may return to the world market after the restoration of the nuclear deal.
Brent oil prices fell from $120 in June to about $95 a barrel on fears of a slowdown in the global economy and a recession in the West. In addition, if sanctions against Tehran are lifted, 1 million barrels of Iranian oil per day may return to the market, which corresponds to 1% of world demand.
In August, Saudi Arabia, the de facto leader of OPEC, signaled that the cartel and its allies could cut production to balance the market.
“It was a reminder that OPEC still plays an important role in the market and that production cuts are not out of the question,” one OPEC+ source said, commenting on statements made by Saudi Energy Minister Prince Abdulaziz bin Salman on August 22.
The physical market is signaling that oil supply remains limited. Oil production in many OPEC countries is lagging behind target levels, and new Western sanctions could lead to a decrease in supplies from Russia.
On Friday, Russia again threatened to cut off oil supplies to countries that support the idea of a cap on prices for Russian energy exports.
The alliance is unlikely to agree on a production cut in October on Sept. 5, given the lack of supply and the political implications of such a decision amid already rising energy prices, according to three OPEC+ sources.
Other sources of OPEC + find it difficult to predict the outcome of the meeting, believing that the ministers of the countries of the alliance can hold a series of consultative meetings over the weekend.
Discussions on a nuclear deal with Iran will add to the uncertainty, although the prospect of an early restoration of the agreement seems even more vague on Friday, analysts said.
Quotations of Brent oil have lost their positions, won against the backdrop of comments from Saudi Arabia, announced on August 22. The Alliance needs to take steps to stop the price decline, said Stephen Brennock, an analyst at PVM.
“Perhaps attempts will be made to enter into a dialogue with the market in the run-up to the meeting,” he added. “Something needs to be done. If an adequate and coordinated response is not given, oil prices may continue to fall.”