Members of The Organization of the Petroleum Exporting Countries (OPEC) and those outside it are meeting in Vienna, Austria, today to finalize further cuts in the production of oil. It is believed that Saudi Arabia, the most powerful member of OPEC and Russia, the most influential nation outside the body, is going to lead the talks.
Saudi Arabia is primarily leading the move, and according to reports, the other members of OPEC have already agreed with the cuts yesterday. Sources suggest that production could be cut by as much as 500,000 barrels per day, and it is a measure that is going to be in place up until March next year.
While it is true that production cuts were expected, the quantum of cuts has left many analysts stunned. The move is aimed at stabilizing the price of oil, and it is expected to be finalized today post discussions with non-OPEC partners like Russia, among others. As the news broke, oil prices started rallying as well in the latest trading sessions.
Stephen Brennock, an oil analyst with PVM Associates, stated that the potential cuts had left the market a bit confused. He said, “It is fair to say that this agreement has left market players with mixed feelings.” He went on to explain his position in the note. He added,
On the one hand, the extent of these extra supply curbs surprised to the upside. On the other hand, there is concern that there was no mention of an extension to cuts beyond the current March 2020 deadline.
At one point, it was not clear whether the OPEC members had managed to agree with the cuts on Thursday after a joint press conference was canceled. It has emerged that Saudi Arabia, which has cuts if production, has asked nations like Nigeria and Iraq from overproducing.