2023-12-01 15:45:36
Xinhua News Agency, New York, December 1 Summary: The production reduction measures of major oil-producing countries fell short of market expectations, and international oil prices fell instead of rising.
Xinhua News Agency reporter Liu Yanan
As the production reduction measures introduced by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries at the ministerial meeting held on November 30 were less than market expectations, international oil prices first rose and then fell that day, closing down significantly.
As of the close of the day, the price of light crude oil futures for delivery in January 2024 on the New York Mercantile Exchange fell by US$1.90 to close at US$75.96 per barrel, a decrease of 2.44%; the price of London Brent crude oil futures for delivery in January 2024 It fell 27 cents to close at $82.83 per barrel, a decrease of 0.32%.
“OPEC+”, composed of OPEC member states and non-OPEC oil-producing countries, held its 36th ministerial meeting via video on the same day. A statement issued following the meeting said that many OPEC and non-OPEC oil-producing countries will continue to voluntarily reduce production in the first quarter of next year, with the total production reduction averaging 2.2 million barrels per day. This production reduction will refer to the 2024 production targets of each member set by the 35th “OPEC+” ministerial meeting in June this year. It is an additional production reduction following the major oil-producing countries announced voluntary production reduction measures in April this year.
Among them, Saudi Arabia will extend its voluntary production cuts of 1 million barrels per day starting in July this year until the end of March next year. In the first quarter of next year, Russia will increase the voluntary daily production cut of 300,000 barrels started in September this year to an average of 500,000 barrels per day. “OPEC+” members such as Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman will also voluntarily reduce production in the first quarter of next year.
In response to the long-disputed issue of production quotas for African countries before the meeting, OPEC lowered the crude oil production caps of Angola, Congo and Nigeria in 2024. In addition, OPEC also decided to invite Brazil to join “OPEC+”.
The ministerial meeting was originally scheduled to be held on November 26, but was postponed due to differences among oil-producing countries over production quotas and other reasons. It is worth noting that since 1.3 million barrels of the total production reduction is a continuation of the existing production reductions of Saudi Arabia and Russia, the actual new production reduction of “OPEC+” this time is an average of 900,000 barrels per day, which is lower than the previous market expectations. An average of 1 million barrels per day. Affected by this, market sentiment was dampened, and international oil prices quickly turned from rising to falling that day.
Sun Ai, a professor at Zhejiang International Studies University and director of the Energy and Ecological Security Research Center of the Rim-Mediterranean Research Institute, believes that the previous postponement of the “OPEC+” ministerial meeting has weakened market expectations to a certain extent, and the results of this meeting have not shown the performance of this year. The tough protective stance in June actually weakened the tone and ended with a “voluntary production cut” with limited binding force. Under the influence of multiple factors such as a higher-than-expected increase in U.S. crude oil inventories and an expected slowdown in global economic growth, market confidence has failed to effectively reshape oil prices. Therefore, it has not provided effective support for oil prices, and the negative effects have been highlighted.
Rob Haworth, investment strategist at U.S. Bank Wealth Management, said investors are still worried regarding the ability of oil-producing countries to implement production cuts and the prospects for global oil demand growth. Some OPEC members have not been successful in enforcing production cuts in the past, which has led to market concerns regarding how much the cuts will actually be implemented.
Phil Flynn, senior market analyst at Price Futures Group in the United States, said that the production cuts announced at this meeting are voluntary rather than mandatory, which makes people doubt whether the production cuts can really be implemented. “We’re getting a promise instead of a clear answer, and that’s unnerving.”
At the same time, internal disagreements within “OPEC+” have also cast doubts on the market’s ability to boost international oil prices. Analysts pointed out that in the current context of fragile oil market confidence, “cracks” within “OPEC+” will have a significant impact on the market.
Sun Ai said that at present, “OPEC+” needs to adjust its strategy to strengthen coordination and communication among members and balance the interests of all parties. On the other hand, it also needs to attract more important oil-producing countries like Brazil to reduce the constraints on its policies from factors outside the alliance and strengthen its voice and influence in the global market. (Participating reporter: Liu Xinyu)
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[Editor in charge: Zhang Xinran]
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