(Reuters) – OPEC+ is working on a complex deal to be agreed at its meeting on Sunday that will allow the group to extend some of its deep oil production cuts into 2025, three sources familiar with OPEC+ discussions said on Thursday.
OPEC+ has made a series of cuts since late 2022 amid rising output from the United States and other non-members, and worries over the demand outlook as major economies grapple with high interest rates to tame inflation.
The Organization of the Petroleum Exporting Countries led by Saudi Arabia and allies led by Russia, known as OPEC+, is currently cutting output by a total of 5.86 million barrels per day, equal to about 5.7% of global demand.
The cuts include 3.66 million bpd by OPEC+ members valid through to the end of 2024, and 2.2 million bpd of voluntary cuts by some members which expire at the end of June.
The deal on Sunday could include extending some or all of the cuts of 3.66 million bpd into 2025 and some or all of the voluntary cuts of 2.2 million bpd into the third or fourth quarter of 2024, the three sources said.
“A decision for 2025 is possible,” one of them said. “We’ll learn more in the next few days.”
The extension of some cuts into 2025 will likely be made conditional on OPEC+ agreeing new individual member output capacity figures later in 2024, two of the sources said.
A fourth source, an OPEC+ delegate, when asked on Friday if Sunday’s meeting would make decisions on 2025, said: “Part of it, yes.”
OPEC+ will begin a series of online meetings at 1100 GMT on Sunday.
The group is trying to agree new oil production capacity for its member countries by the end of 2024, an issue that has created tensions in the past because each nation’s output target is calculated based on its notional capacity.
“If the cuts are indeed extended into 2025 that will also raise the issue of the group’s planned capacity audit and baseline reset, which likely won’t be settled until later this year,” said Rory Johnston, founder of oil research service Commodity Context.
The countries which have made voluntary cuts that are deeper than those agreed with the wider group are Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates.
“We would not entirely rule out a plot twist – in the form of a deeper cut – given (Saudi energy minister) Prince Abdulaziz’s (bin Salman) penchant for Hollywood twist endings,” said Helima Croft from RBC Capital Markets.
Prince Abdulaziz has repeatedly said he likes keeping the oil market on its toes and has promised to punish speculators.
The OPEC+ meeting coincides with a sale by Saudi Arabia of a new stake in state oil giant Aramco.
The Saudi government on Thursday filed papers to sell a stake that could raise as much as $13.1 billion to help fund Crown Prince Mohammed bin Salman’s plan to diversify the economy.
Share This: