VIENNA, June 4 (Reuters) – OPEC and its allies met on Sunday to try to agree further cuts in production, sources told Reuters, as the group faces flagging oil prices and a supply glut.
The group, known as OPEC+, delayed the start of formal talks by at least three-and-a-half hours due to sidelong discussions among members on production bases from which cuts and quotas are calculated, the sources said.
Sources said OPEC’s most influential members and the biggest Gulf producers, led by Saudi Arabia, are trying to get low-producing African countries such as Nigeria and Angola to keep more realistic output targets.
“Negotiations with African producers are difficult,” said an OPEC+ source. A Gulf producer, the United Arab Emirates, meanwhile, is seeking a higher base to reflect its growing production capacity, sources said.
OPEC+, a group of allies led by Russia and the Organization of the Petroleum Exporting Countries, pumps 40% of the world’s crude oil, meaning its policy decisions can have a huge impact on oil prices.
Four sources familiar with the OPEC+ discussions told Reuters that additional production cuts are being discussed in options for Sunday’s session.
“We are discussing the whole package (of changes to the contract),” one of the four sources said.
Three of the four sources said output would be 1 million bpd on top of the existing voluntary cuts of 2 million bpd and 1.6 million bpd, a surprise move announced in April that took effect in May.
The April announcement helped push oil prices up $9 a barrel to above $87, but they quickly retreated under pressure from worries about global economic growth and demand. On Friday, Brent, the international benchmark, was at $76.
If approved, a new cut would bring the total cut to 4.66 million bpd, or 4.5% of global demand.
Generally, production cuts take effect one month after they are agreed, but ministers can also agree to implement later. They may decide to keep the output consistent.
Last week, Saudi Arabia’s Energy Minister Prince Abdulaziz said investors betting on lower oil prices or falling prices should “be careful,” in what many market watchers interpreted as a warning about further supply cuts.
Bases for 2023 and 2024
Three OPEC+ sources said the group will address fundamental issues for 2023 and 2024, which were previously contentious.
Nigeria and Angola have long been unable to produce in line with their targets, but resisted lower baselines because the new targets could force them to make real cuts.
In contrast, the UAE has claimed a higher base in line with its growing manufacturing capacity, but that means its share of the overall cut may decline.
The West accused OPEC of manipulating oil prices and undermining the global economy through high energy costs. The West has accused OPEC of supporting Russia in defiance of Western sanctions over Moscow’s invasion of Ukraine.
In response, OPEC insiders have said that Western money printing over the past decade has driven inflation and forced oil-producing countries to act to preserve the value of their key exports.
Asian countries such as China and India, which buy a large share of Russia’s oil exports, have refused to join Western sanctions against Russia.
OPEC has denied media access to its headquarters to reporters from Reuters and other news outlets.
Reporting by Ahmed Khader, Alex Lawler, Maha El Dahan and Julia Payne; Written by Dmitry Zhdanikov; Editing by Hugh Lawson, Emilia Sithole-Madaris and Barbara Lewis
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