Oil holds decline as OPEC+ dispute clouds outlook for production

Oil held a decline after the OPEC+ alliance was forced to delay a critical meeting amid a dispute over output quotas, casting a pall of uncertainty over the group’s production policy for next year.

Global benchmark Brent was steady above $81 a barrel after dropping 1.3% over the previous two sessions, while US counterpart West Texas Intermediate was below $77 a barrel following the Thanksgiving break.

Saudi Arabia, the de facto leader of the Organization of Petroleum Exporting Countries, and its allies are embroiled in a dispute over output quotas for African members. The meeting initially planned for this weekend has been pushed back to November 30, and it’ll be an online session instead of in-person.

Crude is on course for a back-to-back monthly loss, with prices down about 16% from a high in late September. The drop has been driven by signs of increased supplies from non-OPEC+ countries, rising US stockpiles, and the fading of the premium generated by the Israel-Hamas war. Meanwhile, the International Energy Agency sees the market tipping back into surplus next year.

“Dark clouds are looming on demand growth for next year, so the market is in need of stronger supply constraints,” said Gao Mingyu, Beijing-based chief energy analyst at SDIC Essence Futures Co.

Before the delay, traders had thought Saudi Arabia was gearing up to announce an extension of its unilateral 1 million barrel-a-day cut. There were also predictions that Riyadh could even steer other members into joining them with extra curbs, but the spat has put that outcome in doubt.

“Investors are assessing whether a deal could still be possible,” ANZ Group Holdings Ltd. analyst Jack Chambers said in a note. “Beyond this event, fundamental developments have been bearish, with rising US oil inventories.”

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