Oil Prices Plummet as OPEC+ Surprises Market with Delayed Meeting on Output
London – In a shocking turn of events, oil prices experienced a nosedive, dropping by 4 percent on Wednesday as OPEC+ producers unexpectedly prolonged a meeting on output that was originally planned for Sunday. The decision to delay the meeting has raised concerns about the future direction of crude production cuts.
Brent crude futures took a hit, falling by $3.39, or 4.1 percent, to $79.06 per barrel by 1412 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude futures sank by $3.26, or 4.2 percent, to $74.51.
The announcement from OPEC stated that the ministerial meeting, which includes Saudi Arabia, Russia, and other OPEC member countries, will now take place on November 30 instead of the initially scheduled date of November 26. No specific reason was provided for the unexpected postponement.
Experts and OPEC+ sources had anticipated the meeting to review potential adjustments to an existing agreement that already restricts supply until 2024.
Prior to the delay, Bloomberg News had reported that the OPEC+ meeting might be pushed back indefinitely due to Saudi Arabia’s dissatisfaction with the output numbers presented by other members.
Analysts had originally predicted that OPEC+ would likely extend or potentially deepen oil supply cuts into the following year.
Both Brent and WTI oil benchmarks have experienced declines for four consecutive weeks, with Brent dropping from nearly $98 in late September. The decline can be attributed to rising supplies, concerns about demand, and fears of an economic slowdown.
On Monday, the two contracts saw a slight increase of about 2 percent after three Reuters sources disclosed that OPEC+ was considering implementing additional oil supply cuts during the November 26 meeting.
Jun Rong Yeap, a market strategist at IG, stated before the delay announcement, The upcoming meeting has been the key central focus for oil prices for now, with sentiment shrugging off the sharp build in U.S. crude inventories.
John Evans of oil broker PVM emphasized that in order to boost prices, OPEC and its allies must not only extend but also increase the cuts. A rollover of cuts and voluntary cuts will send the market south, for the current level of supply clamp is not enough to persuade the market that it is ‘tight’, he stated in a note on Wednesday.
Earlier this week, an OPEC technical panel invited a top financial market dealer to present a bearish outlook for the oil market, as seen by Reuters.
The head of the International Energy Agency’s (IEA) oil markets and industry division warned on Tuesday that even if the OPEC+ nations extend their cuts into the next year, the global oil market will still experience a slight supply surplus by 2024.
As the oil industry navigates these uncertain waters, market participants and consumers alike are left anxiously awaiting the outcome of the delayed OPEC+ meeting.
