The Opec+ group was locked in talks over a further cut in oil supplies on Sunday as Saudi Arabia and its allies scrambled to prop up the price, but hesitation from weaker African members of the group raised the prospect that no deal may be reached.
Saudi Arabia’s energy minister Prince Abdulaziz bin Salman, Opec’s de facto leader, is expected to target cutting up to 1 million barrels a day from the market, or about 1 per cent of global supplies, marking the third cut the combined Opec+ group has made since October.
But other weaker members including Nigeria and Angola are already struggling to hit existing output targets after years of underinvestment, and are reluctant to make deeper cuts.
Nigeria wanted to increase its own production target, not cut it, one Opec delegate said. The country argued it had addressed some of the problems that had held back its output and it was ready to pump more, the delegate said after Saturday’s meeting, adding that Angola had also opposed further cuts.
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Prince Abdulaziz later convened talks at his hotel with African producers including Equatorial Guinea and Congo, without reaching an agreement.
Talks with other producers including Russia, which helped form the expanded Opec+ grouping in 2016, could also be complicated by a desire to raise production baselines – the maximum output capacity levels from which cuts are calculated – for some members, chiefly the UAE.
The UAE has long sought a higher baseline to reflect its growing production capacity, and the country’s energy minister expressed confidence before the meeting that Opec+ would reach an agreement.
Discussions between members went on late in to the night after the meeting of core Opec countries on Saturday, said delegates. Broader Opec+ talks involving Russia, Kazakhstan and Mexico are under way on Sunday.
One person close to the Saudi delegation said it believed most issues had been resolved before Sunday’s meeting, though about two hours after talks got under way Angola’s resources minister, Diamantino Pedro Azevedo, departed Opec headquarters without explaining why.
Opec secretary general Haitham Al Ghais, the group’s official leader, accompanied Azevedo to his ministerial car and hugged him goodbye.
Saudi Arabia is keen for the Opec+ alliance to cut production again to prop up oil prices, which have slid towards $70 a barrel in recent weeks, from over $120 a year ago.
Riyadh requires an oil price above $80 a barrel to balance its budget, said the IMF, and to fund some of the “giga-projects” that crown prince Mohammed bin Salman hopes can transform its economy.
When asked about further cuts or any potential changes to members’ maximum production levels, Prince Abdulaziz deflected. “You have no idea what we are discussing,” he said before Sunday’s meeting.
In a sign of growing tension between the Saudi energy minister and parts of the press, several journalists, including the entire teams from Reuters and Bloomberg, were blocked from attending the weekend’s meetings. It is the first time that Opec, through decades of wars, price spikes and crashes, has excluded news organisations in this way.
Opec has faced criticism for its alliance with Russia following the full-scale invasion of Ukraine and for attempting to prop up prices during an energy crisis triggered by Moscow’s actions.
The decline in oil prices since October may have made the White House more sanguine about further production cuts, however, said analysts, as the US tries to mend ties with Saudi Arabia. – Copyright The Financial Times Limited 2023
