OPEC and its allies will consider whether to deepen cuts to crude supply when they next meet in December due to worries about weak demand growth in 2020, sources from the oil-producing club said.
Saudi Arabia, OPEC’s de facto leader, wants to focus first on boosting adherence to the group’s production-reduction pact with Russia and other non-members, an alliance known as OPEC+, before committing to more cuts, the sources said.
OPEC members Iraq and Nigeria are among the countries that have failed to comply properly with pledged output reductions.
Saudi Arabia and other Gulf producers in the Organization of the Petroleum Exporting Countries have been delivering more than their share of promised cuts to stabilize the market and prevent prices from falling.
Riyadh has been pumping some 300,000 barrels per day (bpd) below its output target, taking the lion’s share of the curbs.
“The Saudis want to prevent oil prices from falling. But now they want to make sure that countries like Nigeria and Iraq reach 100% compliance first as they have promised,” one OPEC source said.
“In December we will consider whether we need more cuts for next year. But it is early now, things will be clearer in November.”
A second OPEC source said: “Of course deeper cuts are an option, but some things should happen before that. The rest of the OPEC+ countries will not cut deeply if Iraq and Nigeria don’t comply 100%.”
Two sources from OPEC and non-OPEC producers said that next month the JTC committee, which monitors compliance with the pact, could start considering scenarios for deeper cuts and make its recommendations to the OPEC+ meeting for debate in December.—Reuters