DUBAI (Reuters) – OPEC+ will consider cutting oil production by more than 1 million barrels per day next week, OPEC sources said on Sunday, in what would be the biggest move so far since the spread of the COVID-19 pandemic. Addressing the weakness of the oil market.
The meeting will take place on the fifth of October against the backdrop of falling oil prices and months of severe market volatility, which prompted Saudi Arabia, the largest producer in OPEC +, to say that the organization may reduce production.
OPEC+, which includes OPEC countries and allies such as Russia, has refused to increase production to lower oil prices despite pressure from major consumers, including the United States, to help the global economy.
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However, prices fell sharply in the last month due to concerns about the global economy and the strengthening of the US dollar after the Federal Reserve raised interest rates.
A major production cut is expected to anger the United States, which is pressing Saudi Arabia to keep pumping more to help oil prices fall further and reduce revenue for Russia as the West seeks to punish Moscow for sending troops to Ukraine.
The West accuses Russia of invading Ukraine, but the Kremlin describes it as a special military operation.
Saudi Arabia has not condemned Moscow’s actions amid difficult relations with the administration of US President Joe Biden.
A source familiar with Russian thinking said last week that Moscow would like to see OPEC+ cut 1 million barrels per day, or 1 percent of global supply.
This would be the biggest cut since 2020 when OPEC+ cut production by a record 10 million barrels per day as demand collapsed due to the COVID pandemic. The group spent the next two years solving those record cuts.
On Sunday, the sources said the cut could exceed 1 million barrels per day. One of the sources suggested that the cuts also include an additional voluntary production cut by Saudi Arabia.
OPEC+ will meet in person in Vienna for the first time since March 2020.
Analysts and OPEC watchers such as UBS and JPMorgan have suggested in recent days that a cut of around 1 million barrels per day is under consideration and could help stem the price slide.
Stephen Brennock of BVM said:
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(Additional reporting by Maha El Dahan, Olesya Astakhova and Alex Lawler) Editing by Gareth Jones, Jean Harvey and Raisa Kasulowski
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