This week, The Wall Street Journal reported that Saudi Arabia and other members of the OPEC+ oil cartel are considering boosting production when the group meets in December. Saudi Arabia’s energy minister flatly denied the report, saying OPEC doesn’t discuss its decisions ahead of its meetings.
Boosting production would be a sharp turnaround for the cartel. Last month, it decided to cut production by 2 million barrels a day.
Despite those output cuts, oil prices have been falling. Matt Smith, an analyst at Kpler, said that’s largely thanks to China and its zero-COVID policy.
“We’re seeing renewed lockdowns, we’re seeing high cases there again, and so oil demand is just remaining depressed in China, the leading importer of crude in the world,” he said.
Smith added that OPEC members want oil prices to rise, since their budgets depend on higher prices. As a result, “you would expect them to perhaps cut production further when the group meets in early December.”
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That said, OPEC could increase production if oil supplies get too tight, said Sara Vakhshouri with SVB Energy International. Europe is about to clamp down on imports of Russian oil, which means less supply.
It’s also getting cold.
“Looking at the next month, we might have colder weather, which means higher demand,” Vakhshouri said.
But if oil prices stay low, Vakhshouri said, we shouldn’t expect OPEC to boost production.