OPEC+ talks tough, policy rollover possible

LONDON: OPEC+ talks on 2024 oil policy are difficult, making a rollover of the previous agreement a possibility rather than deeper production cuts, four OPEC+ sources told Reuters on Tuesday.

The OPEC+ group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia is scheduled to meet online on Thursday to decide oil output levels for 2024, according to a draft agenda seen by Reuters on Monday.

A further delay to the meeting is possible, the sources indicated. Two of the sources said an additional cut - a step that sources have said would be looked at - was not being actively discussed. "Everyone is just holding their positions," one of the sources said.

The meeting has already been delayed from Nov. 26. OPEC+ sources said this was because of a disagreement over output levels for African producers, though sources have since said the group has moved closer to a compromise on this point. OPEC's previous meeting in June had already extended output cuts into 2024.

Saudi Arabia, Russia and other members of OPEC+ have already pledged total oil output cuts of about 5 million barrels per day (bpd), about 5 percent of daily global demand, in a series of steps that started in late 2022.

This includes Saudi Arabia's additional voluntary production cut of 1 million bpd, which is due to expire at the end of December, and a Russian export cut of 300,000 bpd until the end of the year.

Meanwhile, oil prices jumped over 2 percent on Tuesday on the possibility OPEC+ deep supply cuts, a storm-related drop in Kazakh oil output and a weaker U.S. dollar. Brent crude futures were up $1.88, or 2.4 percent, at $81.86 a barrel by 1603 GMT. U.S. West Texas Intermediate (WTI) crude gained $1.84, or 2.5 percent, to $76.70.

The market tumbled last week when OPEC+ pushed back the original date for its meeting to iron out differences on production targets for African producers. "Even with the disagreement, the possibility of keeping the deal as is for another month remains high," said Phil Flynn, an analyst at Price Futures Group in Chicago.

One possible compromise could involve Angola and Nigeria accepting reduced production targets for a few months if targets for the other countries were likewise lowered, said Commerzbank's Carsten Fritsch.

"According to delegates, Saudi Arabia is demanding lower production quotas from the other OPEC+ countries. While Kuwait has signaled that it would be willing to do so, some countries are apparently resisting any such move."

The United Arab Emirates is likely to oppose this, given that its 2024 production target was increased at its urging when OPEC+ held its previous meeting in early June, he added. Oil also found support from a weak dollar, an expected decline in U.S. crude inventories and the drop in Kazakh output.

Kazakhstan's largest oilfields have cut their combined daily oil output by 56 percent. Four analysts polled by Reuters estimated that the latest round of weekly U.S. supply reports will show crude inventories fell by about 2 million barrels.

The first of this week's two reports is due at 2130 GMT from the American Petroleum Institute. The U.S. dollar sank to a three-month low on Tuesday after U.S. Federal Reserve Governor Christopher Waller flagged the possibility of lowering the Fed policy rate in the months ahead if inflation declines further. A weaker dollar typically bolsters oil demand, making dollar-denominated oil less expensive for buyers using other currencies.