OPEC Delay Sparks Oil Price Rollercoaster: Oil prices took a sharp dip of over 4% as a group of major oil-producing nations, known as OPEC+, decided to delay a meeting scheduled for Sunday. This meeting was expected to discuss potential further cuts to global oil supply.
Both Brent crude and West Texas Intermediate (WTI) crude experienced a decline of over 4%. Brent traded down 3.7% to $79 a barrel, while WTI fell 3.8% to $75 a barrel. The delay in the meeting raised concerns about potential disagreements among OPEC+ members regarding production levels and associated cuts.
US gas prices may drop during Thanksgiving weekend due to falling oil prices. Regular petrol costs $3.28, down about 8% in a month and 10% from last year. The OPEC+ ministerial meeting was rescheduled for November 30, although the official announcement did not explain why. According to sources, the postponement is due to a disagreement over current production levels among some members and potential cuts associated with them.
Analysts suggest that the market’s reaction indicates traders’ concerns about a lack of full agreement on the scale of output cuts for the coming year. Both Brent and WTI prices have experienced declines for four consecutive weeks, influenced by record crude oil production in the United States and concerns about weakening global demand, especially in China, the largest oil importer globally.
Brent is in a bear market after falling 18% since late September, and WTI is 20% lower since its peak. Prices have fallen despite OPEC+’s vow to cut supply by 1.66 million barrels per day until the end of the year and Saudi Arabia and Russia’s voluntary reduction. Analysts expect OPEC+ to reach an agreement at the rescheduled meeting on November 30, but challenges are anticipated in the negotiation process.
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Our Reader’s Queries
Why was OPEC meeting delayed?
The scheduled meeting, originally set for Nov. 26, has been postponed due to a disagreement over output quotas for African producers. However, sources have indicated that the issue has been largely resolved by the OPEC+ group.
Why was OPEC unable to maintain high oil prices?
It’s true that OPEC couldn’t sustain high oil prices in the long run. This is because the supply and demand for oil are more flexible over time. The short run refers to a period when at least one input is fixed.
Why does OPEC cut oil production?
In a bid to bolster the market, OPEC+ members including Saudi Arabia and Russia have agreed to implement voluntary oil output cuts for Q1 2024. However, despite this move, crude prices have taken a hit.
How does OPEC influence oil prices?
When OPEC production targets are lowered, crude oil prices have historically risen. OPEC member countries are responsible for producing 40% of the world’s crude oil and their oil exports make up 60% of the total petroleum traded globally. These factors have a significant impact on global oil prices.