OPEC and 10 other producers, including Russia, are likely to decide on Wednesday in Vienna to cut oil production in a complex context combining falling prices, doubts about the development of demand, problems with production and sanctions on Russian oil, reports EFE agency, quoted by Agerpres.

After more than two years of virtual meetings forced by the pandemic, the 23 OPEC+ nations are holding their first ministerial-level meeting in a physical format on Wednesday, showing a determination to send a clear signal of strength to markets.

Although the ministers who arrived in Vienna on Tuesday did not want to predict what will happen, analysts and specialized media believe that the production cuts will have enough support. It’s less clear how big it will be, with estimates ranging from 500,000 to 2 million barrels a day, a figure that would represent 2% of current global supplies.

Discussions about output cuts come at a time when oil prices have fallen 25% compared to June.

In addition, doubts remain about the shift in demand, especially in China, one of the biggest oil consumers, which is imposing restrictions and isolation in some cities due to the resurgence of Covid 19 outbreaks.

Oil supply problems

At the same time, forecasts regarding the growth of the world economy, and therefore oil consumption, continue to be marked by uncertainty. In addition, there are problems on the other side of the chain, namely supply.

OPEC+ cannot meet current production quotas, and of the group’s 23 countries, only Saudi Arabia and the United Arab Emirates have the capacity to increase production more.

Johannes Raubal of energy analyst agency Kpler estimated in a statement to EFE that OPEC+ produced 4.1 million barrels less in September than planned for the month.

In this context, a number of analysts believe that the decision of the G7, which unites the richest countries, to introduce a ceiling on the price of Russian oil, as well as the plans of the European Union to do the same, have influenced the strengthening of the alliance between OPEC. and Russia.

Concerns about capping Russian oil prices

Manufacturers see this restriction as a dangerous precedent for consumer countries trying to control prices. In fact, among the decisions to be made on Wednesday could be the extension beyond the end of the year of the alliance between OPEC and the 10 producers, which was established in 2016.

In parallel, the United States continues to pressure its allies in the Middle East, members of OPEC, such as Saudi Arabia and Kuwait, so that they do not cut production, a strategy that began in July when President Joe Biden visited Riyadh, EFE writes.

According to CNN, the U.S. government has contacted officials in those countries to ask them not to cut oil supplies, believing that the cuts would escalate prices and shock the economy, which could damage it in the context of elections to be held in November due to which will be updated part of the legislative power.