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OPEC+ to consider oil cut of over than 1 million bpd - sources

Economy Oct 02, 2022 12:51PM ET
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© Reuters. FILE PHOTO: A 3D-printed oil pump jack is seen in front of displayed OPEC logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/File Photo

By Maha El Dahan and Olesya Astakhova

DUBAI (Reuters) -OPEC+ will consider an oil output cut of more than a million barrels per day (bpd) next week, OPEC sources said on Sunday, in what would be the biggest move yet since the COVID-19 pandemic to address oil market weakness.

The meeting will take place on Oct. 5 against the backdrop of falling oil prices and months of severe market volatility which prompted top OPEC+ producer, Saudi Arabia, to say the group could cut production.

OPEC+, which combines OPEC countries and allies such as Russia, has refused to raise output to lower oil prices despite pressure from major consumers, including the United States, to help the global economy.

Prices have nevertheless fallen sharply in the last month due to fears about the global economy and a rally in the U.S. dollar after the Federal Reserves raised rates.

A significant production cut is poised to anger the United States, which has been putting pressure on Saudi Arabia to continue pumping more to help oil prices soften further and reduce revenues for Russia as the West seeks to punish Moscow for sending troops to Ukraine.

The West accuses Russia of invading Ukraine, but the Kremlin calls it a special military operation.

Saudi Arabia has not condemned Moscow's actions amid difficult relations with the administration of U.S. President Joe Biden.

Last week, a source familiar with the Russian thinking said Moscow would like to see OPEC+ cutting 1 million bpd or one percent of global supply.

That would be the biggest cut since 2020 when OPEC+ reduced output by a record 10 million bpd as demand crashed due to the COVID pandemic. The group spent the next two years unwinding those record cuts.

On Sunday, the sources said the cut could exceed 1 million bpd. One of the sources suggested cuts could also include a voluntary additional reduction of production by Saudi Arabia.

OPEC+ will meet in person in Vienna for the first time since March 2020.

Analysts and OPEC watchers such as UBS and JP Morgan have suggested in recent days a cut of around 1 million bpd was on the cards and could help arrest the price decline.

"$90 oil is non-negotiable for the OPEC+ leadership, hence they will act to safeguard this price floor," said Stephen Brennock of oil broker PVM.

OPEC+ to consider oil cut of over than 1 million bpd - sources
 

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Comments (7)
Ken Roth
Ken Roth Oct 02, 2022 3:56PM ET
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Pumping up prices is putin and bin salman game meanwhile russia producing and selling all they can. Saudis are loosing marketshare
Warm Camp
Warm Camp Oct 02, 2022 3:56PM ET
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Saudis do not lose market share, because Russian production really declines. That’s the reason why Putin calls for big production cut.
Ken Roth
Ken Roth Oct 02, 2022 3:45PM ET
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Opec+ are not even producing to current quota this is standard talk to pump up oilprices. Meanwhile russia will produce and sell all the oil the can to finance the peter the great project and the saudis will loose marketshare
Ken Roth
Ken Roth Oct 02, 2022 3:42PM ET
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Typical putin and bin salman play..lets get the oil prices up so we can get more money from the suckers dependant on our oil…problem is they are not even producing oil to opec + current quota. Also Putin needs money to finance his peter the great project so He will meanwhile produce and sell as much oil as possible loosers will be the saudis.
Ac Tektrader
Ac Tektrader Oct 02, 2022 3:18PM ET
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the hand writing is on the wall, the more opec attempts to maintain high crude prices the faster the world moves to eliminate carbon based energy, as a primary energy source.
Ac Tektrader
Ac Tektrader Oct 02, 2022 3:11PM ET
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more spam from vivian and lucus
Roger Miller
Roger Miller Oct 02, 2022 1:06PM ET
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By releasing SPR’s the Biden administration has put the US in a vulnerable situation. The SPR’s will need to be replaced, but at a price dictated by OPEC+, unless domestic drilling is encouraged, not discouraged.
Warm Camp
Warm Camp Oct 02, 2022 12:55PM ET
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1M cut will be adopted only if Biden’s administration announces before the meeting that SPR releases will be extended beyond October 2, official end date. In any case, oil price goes to triple digits after US midterms.
Brad Albright
Brad Albright Oct 02, 2022 12:55PM ET
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The move to green energy is not like flip ping a switch; its a process being achieved by entrepreneurs and visionaries. In the US alone, green electricity generation has gone from near zero 15 years ago to over 20% today. What do you have against American knowhow, innovation and a better world for future generations?
 
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