OPEC+ is likely to keep oil output quotas unchanged for October at a meeting on Monday, three OPEC+ sources said, although some sources would not rule out a production cut to bolster prices that have slid from sky-high levels hit earlier this year.
The Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, meets as demand faces headwinds and supply could be boosted by returning Iranian crude if Tehran secures a deal with world powers on its nuclear work.
Brent crude has dropped to about $95 a barrel from $120 in June on fears of an economic slowdown and recession in the West. Iran is expected to add 1 million barrels per day to supply or 1 per cent of global demand if sanctions are eased.
Last month, top OPEC producer Saudi Arabia flagged the possibility of output cuts to balance the market.
“This is a reminder to the market that OPEC is still here and a cut is not ruled out,” an OPEC+ source said of comments on Aug. 22 by Saudi Energy Minister Prince Abdulaziz bin Salman.
Signals from the physical market suggest supply remains tight, with many OPEC states producing below targets and fresh Western sanctions threatening Russian exports.
Russia repeated on Friday that it would stop supplying oil to countries which support the idea of capping the price of Russian energy supplies amid a military conflict in Ukraine.
Three other OPEC+ sources said the Sept. 5 meeting was unlikely to reduce production in October, citing factors such as tight supply and the political backlash from such a move at a time of soaring energy prices.
But several OPEC+ sources said the outcome looked uncertain and ministers could consult over the weekend.
Analysts said an Iranian nuclear deal would add to uncertainty around the meeting, although the prospect for securing a deal looked less clear on Friday.
Stephen Brennock, analyst at oil broker PVM, said Brent had given up gains it made after the Saudi comments on Aug. 22 and the group needed to take action to stem the rout.
“Efforts will likely be made to talk the market up ahead of the crucial meeting,” he said. “That being said, talk is cheap in this business. Action is needed. The failure to deliver an adequate and unified supply response risks sending oil prices tumbling further.”
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