Oil prices experienced a significant surge this week as expectations grew that the Organization of Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, would intensify voluntary production cuts. Both Brent crude and West Texas Intermediate saw notable increases in mid-morning trade in Asia, surpassing $81 per barrel for Brent and breaching the $76 mark for WTI. The rise in prices comes ahead of OPEC+ members’ meeting scheduled for next Sunday, where discussions on production policy are expected to take place. Reuters reported insights from unnamed sources within OPEC+ suggesting a consideration of additional production cuts.
Mounting expectations of OPEC+ adopting deeper voluntary production cuts led to a surge in oil prices, with Brent crude exceeding $81 per barrel. OPEC+ members are set to convene to discuss production policy amid insights that further cuts are on the table. Goldman Sachs analysts indicated that deeper cuts should not be ruled out, citing a decline in speculative positioning, time spreads, and higher-than-expected inventories.
While initial projections suggested a tight oil balance for the rest of the year, an unexpected supply surge has eased the anticipated deficit for Q4 2023. ING analysts anticipate Saudi Arabia and Russia to potentially deepen production cuts, but uncertainty remains regarding broader OPEC+ actions. The recent 20 percent slump in oil prices since late September adds complexity to the oil market’s future trajectory.