OPEC+ ONLINE MEETING

PLATTS - 23 Nov 2023 - OPEC and its allies will now hold their Nov. 30 meeting online, rather than in person in Vienna, the OPEC secretariat said Nov. 23, with the group still hoping to iron out differences over production quotas.

Ministers from the 23-country alliance were due to fly to the Austrian capital next week for potentially fraught negotiations, in the face of slumping oil prices and an uncertain market outlook, having pushed back their original meeting date of Nov. 26.

Delegates have indicated that quotas for 2024, as well as compliance with quotas, are sticking points in the talks.

The OPEC secretariat did not give any reasons for the shift. The new date of the meeting coincides with the opening ceremony of the UN's Climate Change Conference, or COP28, being hosted by OPEC member the UAE.

With global oil demand set to moderate in the first quarter of 2024, the OPEC+ alliance appears set to extend its production cuts, though the duration is yet to be determined, analysts say. As well, deeper cuts could be considered, some OPEC+ officials have hinted.

"OPEC+ is faced with a challenging oil supply and demand situation in 2024, and its decisions on Nov. 30, 2023, will show how it plans to deal with it, at least in the short term -- either by reducing oil supply further or risking a price reaction, all else equal," S&P Global Commodity Insights analysts said in a note Nov. 22.

OPEC+ must manage the impact of growing non-OPEC crude production growth as well as weak economic data, particularly in key export market China.

Platts, part of S&P Global Commodity Insights, assessed Dated Brent at $79.48/b on Nov. 22, down 3.3% on the day and 18.8% from a recent peak of $97.92/b on Sept. 27, when voluntary OPEC+ cuts implemented in the summer were boosting prices.

The potential market impact of geopolitical issues, including the Israel-Hamas war and Russia's ongoing invasion of Ukraine, are further complicating 2024 forecasts and OPEC+ policy plans.

Rapidan Energy Group sees multiple points of contention, including the UAE, West African countries and possibly Iraq.

"Despite this, we see the most likely outcome to be continuing with already-agreed production levels," Clay Seigle, director, global oil service at Rapidan Energy Group, said.

OPEC+ reached provisional agreement on new quotas for 2024 at its last full ministerial meeting in June. This included boosting the UAE's quota, but cutting production targets for some African producers, including heavyweights Angola and Nigeria and smaller producers including Republic of Congo and Equatorial Guinea.

African members were given until November's meeting to demonstrate significantly higher production capacity and avert quota downgrades. Despite failing to do so, these members have balked at investment-sapping quota cuts in recent days, in a major test of OPEC unity, sources said.

One delegate said the group was yet to agree on production baselines, while ruling out a boycott by aggrieved African members.

As S&P Global Commodity Insights reported Nov. 20, Angola's oil minister, Diamantino Azevedo, was set to skip the now-postponed Nov. 26 meeting. Reached on Nov. 23, a spokesperson for the minister's office said his participation on Nov. 30 was still uncertain.

"I doubt he goes," said a source familiar with Azevedo's thinking.

Iranian role

Another contentious issue during the meeting could be whether the group will make a coordinated response to the Israel-Hamas war. Previously Iran called for an embargo on oil exports to Israel.

Despite other OPEC countries indicating that they do not support an embargo, the conflict has angered many in the Middle East. Talks over a cease-fire in the conflict are also now at a critical juncture, and active fighting raises the risk of a greater international response.

Iranian oil minister Javad Owji said Nov. 23 that the situation threatens market stability, according to Iranian state television.

"Expansion and continuation of tensions in the Middle East will bring about uncertainty and instability in the energy markets, especially in the oil market. This jeopardizes energy supply security and sustainable development of the energy industry," he said.

He also backed ongoing cooperation within group.

"The OPEC+ agreement and its decisions is an important factor in eliminating the oil market fluctuations, helping improvement of the global economy conditions and encouragement of new investment in the oil industry and energy security," Owji said. 

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