The hearts of the people are scattered, and the team is not easy to lead.
OPEC+ seems to have "failed" again.
The OPEC+ meeting in November was supposed to be a serious one. Instead, the meeting was initially postponed to the 29th and then moved to an online one, exposing the conflicting interests of the group's large and small oil producers.
OPEC+ West African members were already very unhappy after the tacit reduction in production quotas at the last meeting in June, when Angola's oil minister even left the venue early, as if to make a gesture.
When OPEC+ ministers finally met online on Thursday, oil prices tumbled 3% as the group seemed unable to reach a consensus.
Yesterday's OPEC+ meeting did not discuss further group-wide cuts, leaving it up to members to decide whether to make larger voluntary cuts
Eight OPEC+ members have decided to cut further production by nearly 2.2 million barrels per day in the first quarter of 2024, but this includes the scale of Saudi Arabia and Russia's previous voluntary production cuts, which are actually just under 900,000 barrels per day in the first quarter of next year, and for these additional voluntary production cuts, these countries can gradually return to the market according to market conditions.
One of the key issues ahead of the meeting was the production quotas set earlier this year for Angola and Nigeria, which have long been "unhappy" with another cut in their production targetsAs a result, Nigeria's production target has been revised upward, and Angola has directly indicated that it will not comply with the new quota.
The meeting repeatedly exposed the difficulties faced by OPEC+, with recent oil prices** reflecting both expectations of a slowdown in global demand and the fact that geopolitical risks have declined:Few now expect the war in Gaza to turn into a broader regional conflict。At the same time, other oil producers, including the United States, Brazil and Guyana, increased production, making up for OPEC+ production cuts.
Although Brazil will join OPEC+ next year, it could make OPEC+ more chaotic and difficult to reach a consensus.
For next year's oil prices,Much will depend on how OPEC+ ultimately exits the production cuts, apparently also depends on the demand situation next year. The market's reaction suggests that it remains disappointed. What worries the market is that these announced cuts are voluntary, not OPEC+-wide。These voluntary cuts show thatIt is becoming increasingly difficult for OPEC+ members to agree on production cuts。As a result, it would be increasingly difficult for the Group to respond if further action was required in the future.
Recent oil prices** also reflect the fact that OPEC+ isIts internal contradictions seem to be flaring up
OPEC welcomed another 10 countries when it "upgraded" to OPEC+ in 2016 and plans to recruit more. as a larger interest group,In order to gain greater market influence, member states can only abandon "self-interest" and insist on maximizing collective interests.
But this is easier said than done. The Angolan minister, who had planned to boycott the meeting, withdrew from the in-person meeting in June, along with his Gabon counterpart。The two ministers are clearly cutting quotas. They share the concern that production cuts will hurt exploration investment.
But on the bright side,At least Angola has not exceeded its target in oil production, and not all Member States. For example,Iraq's daily production has exceeded its limit。Due to sanctions,Iran and Venezuela are exempt from the bloc's production capMexico refused to accept quotas。Despite being a member of OPEC+, butThey have both been selling more oil lately, eager to absorb the market share lost by Russia and Saudi Arabia to production cuts.
Alberto Behar of the International Monetary Fund (IMF) and Robert Ritz of Cambridge University wrote that the organization faced a similar situation in 2014, when members increased their ** in order to drive down oil prices, as announced at the OPEC meeting nine years ago in NovemberThe goal is to grab market share, which has the advantage of stimulating demand and eliminating the need for OPEC members to be disciplined, allowing them to produce as much oil as they want.
But this approach is no longer viable. OPEC's last round of market share strategy has helped constrain U.S. oil producers to become more efficient and therefore more resilient to future squeezes。JPMorgan estimates that the cost of extracting oil in the United States has fallen by more than a third since 2014, and the country's oilmen have refined their methods and are now drilling deeper, longer-lasting wells.
None wants OPEC+'s current strategy to succeed more than Saudi Arabia and Russia.
According to the IMF, the country's massive vision plan to push Saudi Arabia's budget-balancing oil price to $85 a barrel, a figure that would be even higher if spending on its sovereign wealth** was included. At the same time, Russia needs oil revenues to finance the Russia-Ukraine conflict. And the postponement of the meeting to November 30 and the results produced did not help either country.