OPEC Oil Production Cuts 11/30 07:00

OPEC Oil Production Cuts      11/30 07:00

   The OPEC oil cartel led by Saudi Arabia and allied producers including 
Russia will try to agree Thursday on cuts to the amount of crude they send to 
the world, with prices having tumbled lately despite their efforts to prop them 
up.

   LONDON (AP) -- The OPEC oil cartel led by Saudi Arabia and allied producers 
including Russia will try to agree Thursday on cuts to the amount of crude they 
send to the world, with prices having tumbled lately despite their efforts to 
prop them up.

   That's been a good thing for U.S. drivers, who have been able to fill their 
gas tanks for less money in recent months and whose costs at the pump can be 
sensitive to moves by the OPEC+ coalition. But it's bad news for OPEC+ 
countries whose oil income props up their economies and who have faced setbacks 
in keeping prices up despite initial fears that the Israel-Hamas war could 
affect oil flows.

   Now, they are struggling to come to a consensus on production cuts, analysts 
say, on the same day the U.N. climate conference kicks off in the United Arab 
Emirates, an OPEC member.

   The group postponed its meeting originally set for Sunday by four days, 
indicating that a new agreement will prove to be challenging, said Jorge Leon, 
senior vice president of oil market research for Rystad Energy.

   "Despite the challenges, we still expect OPEC+ to reach an agreement to 
reduce production," he said in an analyst note. That's because "every member 
country acknowledges the need to reduce output to support prices into 2024."

   The question is how to split it among the 23 member countries, some of whom 
already accepted lower production targets at the last OPEC+ meeting in Vienna 
in June.

   Another big question is whether Saudi Arabia and Russia will extend their 
additional voluntary cuts of 1 million barrels per day and 300,000 barrels per 
day, respectively, into 2024.

   Russia wants more oil revenue as it faces Western sanctions but seeks to 
pour energy earnings into its war chest against Ukraine. The Saudis have to 
earn nearly $86 per barrel to meet their planned spending goals, according to 
the latest estimate from the International Monetary Fund.

   The Saudis are trying to fund an ambitious overhaul of the kingdom's 
economy, reduce its dependence on oil and create jobs for a young population.

   But the international benchmark Brent crude has stayed in the low- to 
mid-$80 range in recent weeks, reflecting concerns about oversupply in a 
weakening global economy, which could weigh on the thirst for oil for travel 
and industry.

   Early Thursday, Brent rose 8 cents to $82.96 a barrel, while U.S. crude rose 
by 11 cents to $77.97 a barrel in electronic trading on the New York Mercantile 
Exchange.

   Lower oil prices have allowed U.S. gas prices to fall or stay steady since 
Sept. 19, AAA said. Gas is averaging just below $3.25 a gallon, the motor club 
said, down about 7% from a month ago.

   But that's still higher than when President Joe Biden took office in January 
2021, when prices were averaging about $2.40 a gallon. High inflation has been 
a political challenge for Biden going into the 2024 election, prompting him to 
say Monday that efforts to improve supply chains and reduce price pressures are 
a priority.

   White House national security spokesman John Kirby declined to address the 
possibility of OPEC+ reducing oil production.

   "The president is going to keep focusing, as he has been, on a healthy 
global market that's properly balanced and that can continue to bring the price 
of gasoline down here in the United States," Kirby told reporters at a briefing 
Monday.

   U.S. oil production has hit records as OPEC+ has cut back, with producers 
outside the group expected to keep leading global growth in oil supply next 
year, the International Energy Agency said in its November oil report.

   For instance, daily production in the U.S. averaged 13 million barrels a day 
in August, an increase of more than 1 million barrels from a year ago, 
according to the latest monthly figures from the U.S. Energy Information 
Administration.

   Now, the risk is growing that Saudi Arabia's production cuts could reduce 
OPEC's influence over oil supplies as other countries boost their output.

   "The kingdom is balancing the desire to keep prices high by limiting supply 
with the knowledge that doing so will lead to a further drop in overall market 
share," Leon said.

   Meanwhile, fears the conflict between Israel and Hamas might spread 
throughout the region, creating a shock to the oil market, have not 
materialized, with the IEA noting that "there has been no material impact on 
oil supply flows from the war."