Production Reduction Measures of Major Oil-Producing Countries Fall Short of Market Expectations, International Oil Prices Fall
_Xinhua News Agency, New York, December 1_
The production reduction measures introduced by major oil-producing countries at the recent ministerial meeting fell short of market expectations, leading to a decrease in international oil prices instead of the anticipated rise.
The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries held a ministerial meeting on November 30 to discuss production reduction measures. However, the measures announced were less than what the market had anticipated, causing oil prices to initially rise and then quickly fall, resulting in significant declines at the close of the day.
The price of light crude oil futures for delivery in January 2024 on the New York Mercantile Exchange fell by US$1.90 to close at US$75.96 per barrel, a decrease of 2.44%. Meanwhile, the price of London Brent crude oil futures for delivery in January 2024 decreased by 27 cents, closing at $82.83 per barrel, a decrease of 0.32%.
The “OPEC+” coalition, comprised of OPEC member states and non-OPEC oil-producing countries, announced that they will continue to voluntarily reduce production in the first quarter of next year, with the total production reduction averaging 2.2 million barrels per day. This decision follows the voluntary production reduction measures announced by major oil-producing countries in April of this year.
The meeting also addressed the issue of production quotas for African countries, with OPEC lowering the crude oil production caps of Angola, Congo, and Nigeria for 2024. Furthermore, Brazil has been invited to join the “OPEC+” coalition.
However, the actual new production reduction of “OPEC+” this time is an average of 900,000 barrels per day, lower than the previous market expectations of 1 million barrels per day. This resulted in dampened market sentiment, causing international oil prices to fall instead of rising.
According to Sun Ai, a professor at Zhejiang International Studies University, and director of the Energy and Ecological Security Research Center of the Rim-Mediterranean Research Institute, the meeting’s outcomes did not meet the tough protective stance that was anticipated, and the voluntary production cut lacks significant binding force. Additionally, market confidence has failed to effectively reshape oil prices, leading to negative effects being highlighted.
Investment strategists and analysts have also expressed concerns regarding the ability of oil-producing countries to implement production cuts and the prospects for global oil demand growth. The voluntary nature of the production cuts has raised doubts about their actual implementation.
Internal disagreements within the “OPEC+” coalition have also raised doubts about the market’s ability to boost international oil prices. Analysts believe that in the current fragile oil market environment, internal disagreements within the coalition will significantly impact the market.
Sun Ai emphasized the need for “OPEC+” to adjust its strategy, strengthen coordination and communication among members, balance the interests of all parties, and attract more important oil-producing countries like Brazil to strengthen its voice and influence in the global market.
Overall, the outcomes of the ministerial meeting have failed to provide effective support for oil prices, and the negative effects on the market have been evident.
(Participating reporter: Liu Xinyu)