Officials from OPEC, Russia and other oil producers are expected to meet Monday by teleconference to decide whether to add more oil to the market. The meeting comes amid rising demand for energy as businesses around the world resume operations.
Analysts say it is likely that the 23-member group, known as OPEC Plus, will sign off on continuing to increase production by a modest 400,000 barrels a day every month under a deal reached in July.
Pressures are building from customers like China and India for additional amounts of crude to ease a tightening market. Some analysts, though, doubt that the producers will want to raise production further now, even though oil prices are near a three-year high and briefly exceeded $80 a barrel for Brent crude, the international standard, on Sept. 28.
“It’s going to take oil prices sustaining above $80 a barrel for a period of time or pushing sharply higher,” for OPEC to consider changing its plan, said Richard Bronze, head of geopolitics at Energy Aspects, a research firm.
There are still reasons for OPEC Plus to be cautious, the thinking goes. Demand for oil has recovered strongly after crashing 9 percent last year, but the pandemic remains a concern in key oil consuming nations, including the United States.
Given the uncertainty, OPEC is likely to be wary of reopening the agreement reached through long and difficult negotiations in July. That deal would bring gradual monthly output increases of 400,000 barrels per day well into next year. OPEC Plus plans to meet each month to review the plan.
A change of course might encounter opposition, and it also might provide an opening for new negotiations on quotas from producers that would like higher ceilings — something that Prince Abdulaziz bin Salman, the Saudi oil minister, who leads these meetings, most likely wants to avoid.
On the other hand, there are reasons the group might want to open the taps. Damage caused by Hurricane Ida in August to oil and gas infrastructure in the Gulf of Mexico has largely negated the impact of recent production increases by OPEC Plus.
In addition, signs of distress are emerging in the energy markets. Already a global crunch in natural gas — a key fuel for generating electric power — threatens to feed into oil prices. British consumers have faced several days of disruption because of a shortage of gasoline that is being blamed on a lack of fuel truck drivers.
A price jump to $90 a barrel or more might throw cold water on demand for oil and prompt a political backlash, including from the United States, some analysts say.
The question is likely to come down to whether Prince Abdulaziz and his colleagues want to make a pre-emptive move now or wait for further developments.
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