Oil dips as OPEC+ delays meeting until Nov. 30

The delayed OPEC+ meeting next week will be held online instead of in-person as the cartel wrangles over production levels amid a slump in oil prices.

Saudi Arabia and its allies are embroiled in a dispute over output quotas for African members. The disagreement has forced the group to push back its scheduled conference by several days to Nov. 30, sending crude plunging by as much as 4.9% to below $80 a barrel in London on Wednesday. 

Before the delay, oil traders had thought Saudi Arabia was gearing up to announce an extension of its unilateral 1 million barrel-a-day cutback in a bid to prop up faltering prices. There were also some predictions that Riyadh could even steer other members into joining them with additional curbs of their own.

The spat puts that outcome in doubt and dredges up a disagreement from June, when Angola, Congo and Nigeria were pushed by Saudi Energy Minister Prince Abdulaziz bin Salman to accept reduced output targets for 2024 that reflected their diminished capabilities. The African exporters have struggled in recent years with under-investment, operational disruptions and aging oil fields.

It’s not the first time that the 23-nation OPEC+ alliance has altered its plans at short notice. It did the same a year ago, shifting its meeting online after fixing production targets at a face-to-face gathering in Vienna the previous month. 

This time around, the rescheduled meeting on Nov. 30th coincides with the first day of United Nations climate talks which are being hosted by OPEC-member the United Arab Emirates in Dubai. Holding in-person talks in Vienna on the same day as the start of COP28 would have created logistical difficulties for a number of energy ministers. 

Traders are now waiting to see whether the Organization of Petroleum Exporting Countries and its partners will resolve the rift on quotas, and agree any measures to shore up the market in 2024. Absence of an agreement on production for next year would leave global oil markets in a precarious position.

Crude is down about 16% from its September peak amid surprisingly strong American output, while China — the world’s biggest oil importer — has seen falling refining margins and faltering economic indicators. 

World markets are poised to tip back into surplus early next year as demand growth slows drastically, while producers like the US and Guyana continue to grow, according to the International Energy Agency. 

At the same time, Iranian supplies have recovered as the US relaxes its enforcement of sanctions, and Russian exports have held steady as the country pumps more than its quota.

OPEC+ delegates say they’re seeking extra time as Angola and Nigeria chafe at lower targets pressed on them by more powerful members. The countries had reluctantly acquiesced to the new quotas with the caveat that they’d be revised higher again if an external audit by three firms  — Rystad Energy A/S, Wood Mackenzie Ltd. and IHS — proved their capacity was larger. 

That assessment has been submitted, but the trio have rejected its findings, officials said, speaking on condition of anonymity.