Sharp drop in oil prices in response to postponement of Opec+ meeting — EnergyWatch

Oil prices are falling on Monday morning as traders await the outcome of the Organization of the Petroleum Exporting Countries and their Allies (Opec+) meeting later this week, where the parties will reach an agreement to limit oil production for 2024.

A barrel of the European reference oil, Brent, costs 80.02 dollars on Monday morning, compared to 82.20 dollars on Friday afternoon. At the same time, US WTI oil is trading at 74.92 dollars compared to 77.07 dollars on Friday afternoon.

Oil prices fell in the middle of last week in response to the Opec+ meeting, which was due to take place this weekend, being postponed to November 30th. The postponement of the meeting was due to disagreements between Saudi Arabia and African oil producers over the size of production targets, according to Reuters.

Since last week, the organization has come closer to a compromise, but this does not change the fact that market sentiment remains negative due to the internal divisions in Opec+ over production quotas. The International Energy Agency (IEA) expects a small supply surplus in the global oil market in 2024 even if Opec+ members extend their production cuts into the new year.

The IEA projects growth of 0.9 million barrels per day in 2024 in global oil markets, down from 2.4 million barrels in 2023.

”Opec+ will need to show significant supply discipline, or at least force its members to do so, if it wants to address market concerns about a large oversupply of oil in 2024,” Vivek Dhar, an analyst at Commonwealth Bank, told Reuters.