Dec 2, 2019

OPEC+ to gather as challenges mount

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

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OPEC's moment of decision on oil production cuts

Saudi Minister of Energy Prince Abdulaziz bin Salman al-Saud arrives for the 177th OPEC meeting in Vienna, Austria, on Dec. 5. Photo: Joe Klamar/AFP via Getty Images

OPEC and Russia are deciding next steps in their three-year effort to restrict production in order to prop up prices, during their two-day meeting currently underway in Vienna.

Why it matters: It will reveal how Saudi Arabia and Russia, the OPEC+ group's dominant players, will continue grappling with soft global demand and the rise of U.S. shale production.

Go deeperArrowDec 5, 2019

OPEC is still having a hard time exerting its sway amid U.S. oil boom

Saudi Minister of Energy Prince Abdulaziz bin Salman al-Saud on Dec. 5. Photo: Joe Klamar/AFP via Getty Images

A new International Energy Agency report underscores why oil markets haven't been hugely impressed with last week's OPEC+ decision to deepen their output curbs.

Driving the news: The agency's latest closely watched monthly report projects that global oil stockpiles could increase by 700,000 barrels per day in the first quarter of 2020.

Go deeperArrowDec 12, 2019

OPEC and Russia near deal on deeper crude cuts, reports say

OPEC and allied producers — notably Russia — are coalescing around a plan to deepen their joint crude oil production restrictions by 500,000 barrels per day, according to multiple reports from Vienna, where the OPEC+ group is currently gathered.

Why it matters: The emerging agreement signals how petro-states are grappling with how to prop up prices amid rising supplies from the U.S. and elsewhere, and sluggish global demand that's hampered by trade battles.

Go deeperArrowDec 5, 2019