Between ministers in Riyadh and others who will participate in the meeting by videoconference, OPEC+ is playing an unprecedented score on Sunday, with one objective: to maintain the unity of the cartel at a time of great economic and geopolitical uncertainties.
The Organization of the Petroleum Exporting Countries (OPEC) led by Saudi Arabia and their allies led by Moscow, who entered into an agreement called OPEC+ in 2016 to better influence the market, were initially due to hold their biannual high mass at headquarters of the cartel in Vienna.
But it was rescheduled online, before an appointment was given to certain members in Riyadh.
The meeting is scheduled to begin at 11:00 GMT.
In the opinion of analysts interviewed by AFP, the 22 ministers should maintain a cautious line by renewing the production cuts already announced, for at least one quarter, or even until the end of the year.
This strategy, started at the end of 2022 in the face of falling prices, aims to take advantage of the scarcity of supply to boost prices.
OPEC+ currently keeps nearly six million barrels underground, both through alliance-wide decisions and additional voluntary reductions.
Discord Quotas
So no suspense there. On the other hand, the group could be pushed to “review the quotas of certain members”underlines Ipek Ozkardeskaya, market analyst at Swissquote Bank.
Those who are traveling to Riyadh seem to want to discuss an increase, an expert close to OPEC explained to AFP. And thus keep facade cuts, while increasing their volumes.
Kazakhstan’s Energy Minister Almasadam Satkaliev confirmed his participation, according to the country’s Interfax agency. Kuwait will also be represented, according to a Source within the oil ministry. The financial press also mentions the potential presence of ministers from Iraq and Russia.
They are among the countries which, with Algeria and Oman, have agreed to tighten the floodgates, at the call of Saudi Arabia, wishing to share the burden of the cuts.
Riyadh will have to “make additional compromises” to allow the modification of quotas, “but it should help protect the unity of the cartel”believes Ms. Ozkardeskaya.
The question is a recurring Source of discord within the alliance, sparking heated debates and even shattering departures. Angola left the OPEC ship at the end of 2023, unhappy with the production target allocated to it.
Prepare to reopen the valves
Mukesh Sahdev at Rystad Energy expects “intense negotiations on key figures”.
Especially since OPEC+ faces “a major challenge” : “the barrels actually put on the market are probably higher than what is recorded”, he notes. Enough to derail the cartel’s strategy.
Iraq and Kazakhstan actually exceeded their quotas in the first quarter, while Russia posted overproduction in April.
Since the last meeting in November, the group has been able to keep crude prices fairly stable, around $80 per barrel for Brent from the North Sea like American WTI, without managing to get them off the ground.
By 2025, market observers are counting on a complex arrangement that would gradually reopen the floodgates without lowering prices.
A real headache, particularly at a time when questions remain about the resilience of global demand.
OPEC persists and maintains its demand forecasts for 2024 in report after report, when the International Energy Agency (IEA) is less optimistic and has revised its estimates downwards.
“Inflationary context, gloomy economic outlook and central bank uncertainties”the environment is ” difficult “comments Ipek Ozkardeskaya, also mentioning the strong competition from American oil and tensions in the Middle East.
