Following a slight cut of 100,000 barrels last month, OPEC+ may cut production significantly at this month's meeting to cope with the continued pullback of oil prices.
On October 2, according to media reports, the OPEC+, composed of oil-producing countries, will consider reducing production by more than 1 million barrels per day when the meeting was held in Vienna on Wednesday. representatives said that before the meeting of ministers of various countries, final decisions will not be made on the scale of production cuts.
After the Russian-Ukrainian conflict escalated in February this year, Brent crude oil once soared to more than $125 per barrel. Since then, as concerns about global economic growth intensified and the strong US dollar have led to oil prices falling to around $85.
JP Morgan and other banks said that OPEC+ may need to reduce daily production by at least 500,000 barrels to stabilize oil prices. Helima Croft, chief commodity strategist at RBC capital markets, believes that OPEC may choose to double the decline.
At the previous September meeting, OPEC+ said that the organization would cut production by 100,000 barrels per day from October, bringing supply back to August levels, which overturned OPEC+'s September increase plan announced by the previous month, and this cut is also the first production cut since the organization's early 2021.
OPEC+ This move aims to stabilize oil prices as market concerns escalate about economic weakness and slowing demand. OPEC+'s move was unexpected, but due to the small range, the market characterized it as a "symbolical" production cut. Saudi then stated that it will maintain the initiative in oil production policies in the future.
Enverus macro oil and gas research director Bill Farren-Price previously analyzed that although OPEC+'s production cuts in September were limited, it sent an important signal to the market, that is, the organization re-entered the price observation mode (continue to reduce production at any time), in order to deter short selling and stabilize the oil price at around $100.
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