What is Likely to Happen at Next OPEC+ Meeting in December?

What is Likely to Happen at Next OPEC+ Meeting in December?
Representatives of Enverus Intelligence Research and the Institute for Energy Research offer their views.
Image by stanisluva via iStock

If Brent prices remain below $80 per barrel, OPEC will have to consider cutting production.

That’s what Al Salazar, Director at Enverus Intelligence Research (EIR), told Rigzone in an exclusive interview last week when asked what is likely to happen at the next OPEC+ meeting in December.

“Sub $80 per barrel Brent pricing is well below government targets that aim to fund social spending programs,” Salazar said.

In the interview, Salazar noted that, “by December, crude and product stock levels will confirm whether or not today’s near-term recessionary/Chinese demand concerns are legitimate”.

“In other words, today’s expectations for weaker demand should lead to stock builds in the coming months. This would justify Brent's recent fall from the mid-$80s to the low $70s,” he added.

“We remain skeptical of the stickiness of this negative demand shift,” he continued.

When asked the same question, Alex Stevens, the Manager of Policy and Communications at the Institute for Energy Research (IER), said this week, “during the December meeting … voluntary cuts are likely to be reassessed in light of ongoing global conflicts affecting demand and trade routes, such as tensions involving the Houthis in the Red Sea and the Russia-Ukraine war”.

“The outcome of the U.S. presidential election will also be a factor; a victory for Kamala Harris should be seen as beneficial for OPEC+,” he added in an exclusive interview with Rigzone.

“Despite her rhetorical shift on several energy issues, her track record of promoting policies that constrain American oil and gas production offer the best look into the actual policies she will pursue if she is elected,” he continued. 

“This would potentially weaken American oil and gas production, reducing the U.S. as a competitive threat to OPEC+’s market influence,” Stevens went on to state.

The IER representative highlighted to Rigzone that, in early June, “OPEC+ decided to extend most of its oil production cuts into 2025 due to significant growth in American production, variable demand, and high interest rates”.

“In September, they opted to maintain these voluntary cuts through November, extending the timeline from October, with plans to gradually phase them out starting in December and continuing into 2025,” he pointed out.

“This decision reflects concerns about overproduction from Kazakhstan and Iraq, which will need to adjust their output,” he added.

In a statement sent to Rigzone on Thursday, Will Hares, a Senior Energy Analyst at the research arm of Bloomberg, said, “OPEC+’s decision to delay its anticipated output hike from October to December has not supported prices above $80”.

“Concerns over demand and the strong growth of non-OPEC+ supply suggest the market will remain well-supplied for the rest of the year, leaving little scope for OPEC+ to increase production,” he warned.

“The easing backwardation in the oil curve further signals a further reduction in the tightness of the physical market,” he went on to state.

Rigzone has asked OPEC for comment on Salazar, Stevens, and Hares’ statements. Rigzone has also asked U.S. Vice President Kamala Harris for comment on Stevens’ statement. At the time of writing, OPEC and Harris have not yet responded to Rigzone.

A statement posted on OPEC’s website earlier this month highlighted that the group turned 64 on September 14.

“In its 64 years of existence, OPEC has championed cooperation and dialogue among all stakeholders to achieve stability in the global oil market, address challenges through inclusive and realistic approaches, and ensure oil continues to support the development of nations and prosperity of mankind,” that statement said.

“The most recent vivid demonstration of these efforts is the Declaration of Cooperation and the Charter of Cooperation between OPEC and non-OPEC countries,” it added.

In that statement, OPEC Secretary General Haitham Al Ghais said, “it is without a doubt that OPEC is the champion of the global oil market and international cooperation, as it continues, day in, day out, to focus on ensuring that the oil market is stable and balanced in the interest of all producers and consumers, as well as the global economy, despite the challenges that our industry faces”.

“As we celebrate today OPEC’s unparalleled history of success, I am confident that, with the continuous support of our OPEC Member Countries and the entire OPEC Family, the Organization is set to continue blossoming for years and decades to come,” he added.

A statement posted on OPEC’s website on June 2 revealed that the 38th OPEC and non-OPEC Ministerial Meeting will be held on December 1. Another statement posted on the group’s site on August 1 revealed that the next meeting of the joint ministerial monitoring committee is scheduled October 2.

To contact the author, email andreas.exarheas@rigzone.com


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Andreas Exarheas
Editor | Rigzone