OPEC+ to Announce Major Output Cuts at Its In-Person Meeting on Wednesday, Report Says

During its last meeting in September, the OPEC+ made it clear that it was ready to stabilize energy markets with a symbolic production cut of 100,000 barrels per day to boost oil prices.

The Organization of Petroleum Exporting Countries (OPEC) and its allies are due to announce major cuts at their first in-person meeting in more than two years in Vienna on Wednesday, in a move set to anger the US and help Russia, the Financial Times (FT) has cited unnamed sources as saying.

The sources claimed that the size of the reductions have yet to be agreed upon by members of the OPEC+ cartel, with Saudi Arabia and Russia reportedly pushing for reductions of 1-2 million barrels per day or even more.

One of the insiders told The FT that the cuts would be “made from existing production, not quota levels that some OPEC+ member countries have been unable to fulfil after years of mismanagement and under-investment.”

The move would probably trigger US countermeasures, including the additional release of oil from the Strategic Petroleum Reserve (SPR), which the Biden administration has already drawn heavily from this year, according to the newspaper.

The report comes as oil prices soared significantly for a second day in a row on October 4, with New York-traded West Texas Intermediate (WTI) crude standing at $86.52 per barrel, extending Monday’s 5.2% run-up.

Brent crude, the London-traded global benchmark for oil, settled up $2.94, or 3.3%, at $91.80 per barrel, adding to Monday’s 4.4% gain.

The cuts in oil production are being considered by OPEC+ purportedly in order to stem a recent slump in prices from the multi-highs reached in March. Saudi Arabia, OPEC’s de facto leader, had originally hinted at the possibility of cuts in August to correct the volatile market.

Russia, which is under Western sanctions on its oil due to Moscow’s ongoing special military operation in Ukraine, has been exporting over the past six months, largely to China, India and other countries that have resisted restrictive anti-Russian measures.

The risk of further US-Saudi strains comes more than two months after US President Joe Biden travelled to Jeddah to meet Crown Prince Mohammed bin Salman, a gathering during which POTUS in particular said that he expected Saudi Arabia to take “further steps” to increase the supply of oil.