OPEC+ to gather as challenges mount
- Ben Geman, author of Axios Generate
OPEC Secretary General Mohammed Barkindo shakes hands with Russian President Vladimir Putin at the 2019 Russian Energy Week forum. Photo: Alexey Nikolsky/Sputnik/AFP via Getty Images
OPEC and Russia — among other allied producers — will gather in Vienna late this week to decide the future of their supply-limiting deal.
Why it matters: The OPEC+ group is struggling to prop up prices amid growing supplies from the U.S. and elsewhere, as well as rather soft demand and trade conflicts.
Where it stands: The current pact, which curbs output by 1.2 million barrels per day, runs through March. Officials will debate whether to continue the existing pact or modify it.
- Reuters reported this morning that there's discussion of deepening the cuts by at least 400,000 barrels per day, and that the prospect is one reason why prices rose earlier this morning.
- However, their piece notes, "Some in the group are wary of encouraging more U.S. production by measures to support prices."
What's new: The latest headwinds for the cartel blew in this morning when President Trump said he's restoring tariffs on steel and aluminum from Brazil and Argentina.
- Trade wars typically slow down oil demand growth, which is a problem for petro-states.
The intrigue: The latest gathering comes as Saudi Arabia is on the cusp of the long-awaited IPO of state oil giant Aramco.
- The share pricing is slated to be announced on Dec. 5, the same day the meeting begins.
- The Wall Street Journal quotes an unnamed Saudi oil adviser who said the kingdom needs "stable prices of at least $60 a barrel."
- “It can’t afford to have a declining oil price as [this] would hurt domestic investors who have bought into the IPO," the adviser said.
Go deeper: New energy technologies are disrupting the power of OPEC