Opec and its allies hope they can stick with their existing oil production plan, resisting calls to help dampen soaring global energy prices to protect the economic recovery when they meet later on Monday.
The oil producer group, which has co-operated with Russia and other countries under the Opec+ banner since 2016, agreed this summer to add 400,000 barrels a day of production each month until the end of 2022.
But with oil prices trading near a three-year high of $80 a barrel, and other energy commodities such as natural gas soaring to record levels well beyond the equivalent price of oil, the group has faced pressure from the US and others to increase output at a faster rate.
The decision could still go either way at Monday’s meeting, but people close to the discussions said Saudi Arabia — the group’s de facto leader — and other members were broadly keen to stick with the existing plan, arguing that oil prices had not risen substantially in recent months, even while other energy commodities had surged.
The group also wants to appear stable and consistent in its decision making, giving long-term guidance to the oil market rather than making knee-jerk production increases it may need to reverse if the pandemic leads to renewed restrictions or lockdowns that hit demand this winter.
“While the group faces undoubted pressure, the most likely course of action is that they stick with the plan,” said Amrita Sen at Energy Aspects, a consultancy. “The group want to signal stability to the market and a clear path for production.”
Opec+ agreed record-breaking production cuts last year when oil demand was falling sharply at the peak of lockdowns across the western world. But, last week, investment Goldman Sachs warned global crude stockpiles were shrinking at a record pace.
US shale producers have also cautioned that the oil market cannot rely on them to quickly increase output this time, with the majority of companies facing pressure from investors to remain cautious after last year’s price crash.
Traders and analysts say there is still some caution ahead of the meeting as a further boost to production cannot be ruled out given the pressure the group has faced, particularly from the White House.
An energy crunch caused by tight supplies of natural gas and coal, which has hit Europe but also increasingly Asia including big oil-consuming economies such as China and India, makes the decision even more difficult for the group.
The United Arab Emirates, a close ally of Saudi Arabia, is keener than some members to raise production more quickly, according to people briefed on pre-meeting discussions.
“If Opec+ now decides to increase production by only 400,000 b/d in November, it will geopolitically look close to reckless,” said Bjarne Schieldrop, chief commodities analyst at SEB in Norway.
“The result [will be] that oil prices will rise yet higher in a situation where energy consumers across the world already are feeling a high level of pain from record high coal and natural gas prices.”
One option may be to bring forward production increases planned for later this year, such as raising output by 800,000 b/d in November but then pausing the following month.
Brent crude oil, the international benchmark, was trading up 0.25 per cent on Monday at $79.50 a barrel, just below the three-year high of $80.75 a barrel it hit last week.
US benchmark, West Texas Intermediate, was up 0.1 per cent at $75.97 a barrel.
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