What Will OPEC+ Do Next?

The Organization of Petroleum Exporting Countries and allies including Moscow meet this weekend to decide on output at an especially complex time in global oil markets. With prices down this month, key market signals flashing weakness, uncertainties around China’s Covid Zero policy, and the European Union locked in hard negotiations to agree a price cap on Russian flows before fresh curbs kick in, here’s what analysts expect:

FGE: 

• Industry consultant FGE said OPEC+ may cut output by another 2 million barrels a day to counter faltering prices.
• “The market is now signaling that there is plenty of crude,” it said.
• Falling benchmarks mean “it now looks very likely that OPEC+ will cut output targets again as it works to support crude prices.”

RBC Capital Markets:

• Recent market weakness could justify a production cut from OPEC+, although it may still choose to keep output unchanged, according to head of commodities strategy, Helima Croft.
• If Brent is poised to break below $80 a barrel and signs point to minimal Russian supply disruption, OPEC+ will likely cut by 500,000 to 1 million barrels a day, she said.
• But if prices rebound and there looks to be sanctions-driven outages of Russian production, the group could stand pat.

Eurasia Group:

• “OPEC+ will seriously consider a new production cut at its upcoming meeting, particularly if crude prices fall much below their current level in the next week,” Eurasia Group said.
• “Ultimately, the decision will depend on the trajectory of the oil price when OPEC+ meets and how much disruption is evident in markets because of the EU sanctions,” it added.

--With assistance from Grant Smith.