Opec+ Switch to Virtual Meeting Signals Policy Roll-Over Ahead of Russian Oil Price Cap

The Opec+ decision to hold its December 4 meeting virtually signals little likelihood of a policy change, sources told Reuters on Wednesday, as the group assesses the impact of the looming Russian oil-price cap on the market.

A virtual meeting puts the focus on the pending European Union deal over the price cap on Russian oil, as well as a December 5 deadline imposed by the bloc for a full embargo on purchases of Moscow’s seaborne crude.

“Opec+ would rather sit on the bench at this time and assess the outcome of what happens on Monday,” one source with direct knowledge of the matter told Reuters on Wednesday. 

The Organisation of the Petroleum Exporting Countries and allies including Russia, known as Opec+, also meets as China’s Covid-19 lockdowns weigh on demand and prices. Still, oil on Wednesday gained support from hopes of a Chinese demand recovery.

Opec+ had been expected to convene in Vienna for only the second time since the pandemic.
Opec also made a meeting of its own ministers planned for Saturday a virtual gathering, and Opec+ cancelled a meeting of oil market experts, the Joint Technical Committee, that had been scheduled for Friday, sources said.

“It looks like a simple decision to roll over on Sunday,” an Opec+ delegate said. Some delegates who had travelled to Vienna for technical meetings this week were making plans to return home ahead of the weekend.

In October, OPEC+ agreed to cut output by 2 million barrels per day (bpd) equal to two per cent of global supply, effective until December 2023. The decision caused a clash with the West as the US administration called the decision shortsighted.

Top Opec exporter Saudi Arabia on November 21 said Opec+ was sticking with output cuts and could take further measures to balance the market.

Analysts and some Opec+ delegates have said a further cut on Sunday should not be ruled out, although two delegates on Tuesday put a low probability of this happening.

“Market fundamentals favour another cut, especially given the uncertainty over China’s Covid situation,” said Stephen Brennock of oil broker PVM.

(Reuters, November 30, 2022)

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