Global Oil Markets in Flux: OPEC+ Postponement Leads to Price Drop


Global Oil Markets in Flux: OPEC+ Postponement Leads to Price Drop
© Getty Images News/Whitney Curtis

In a surprising move that rippled through global oil markets, the OPEC and its allies announced the postponement of a crucial meeting originally scheduled for Sunday. This delay, aimed at discussing potential further cuts to global oil supply, led to a significant drop in oil prices.

Brent crude, the global standard, and West Texas Intermediate (WTI) crude, the US benchmark, both plummeted over 4% in response. The timing of the price drop holds particular significance for US consumers, especially with the upcoming Thanksgiving holiday weekend.

As of late morning ET, Brent was trading down 3.7% at $79 a barrel, and WTI down 3.8% at $75 a barrel. This downturn could be welcome news for Americans, as the average price of a gallon of regular gas stands at $3.28, showing a nearly 8% decrease over a month and 10% lower than last year, according to the AAA.

Speculations and Challenges Ahead

The decision to delay the OPEC+ ministerial meeting until November 30 has sparked various speculations, particularly regarding disagreements among member countries over current production levels and potential cuts.

Reports from Reuters and Bloomberg suggest that there might be discord within the group, especially with Saudi officials reportedly expressing dissatisfaction with the output levels of some OPEC members. Craig Erlam, a senior market analyst at OANDA, highlighted the market's reaction to the news, suggesting that traders might be skeptical about the group reaching an agreement on output cuts for the coming year.

This skepticism is further fueled by the recent trends in oil prices, with both Brent and WTI experiencing declines for four consecutive weeks. Concerns about waning global demand, especially from China, the world's largest oil importer, and record crude oil production in the United States have contributed to these price trends.

Jorge León, senior vice-president at Rystad Energy, expressed his concerns about the potential deadlock at the upcoming meeting, noting the unprecedented nature of a four-day postponement. He pointed out the difficulty for several OPEC+ members, including Russia and Nigeria, in accepting lower production targets.

Despite these challenges, Rystad Energy anticipates that OPEC+ will likely reach an agreement, though the process may be fraught with difficulties.