As the November 30 OPEC meeting approaches, news is flowing in on the possible production cut deal, the first since 2008. Representatives from OPEC countries have been submitting their proposals to be discussed. Algeria has recommended an output cut of 4% to 4.5% for all members excluding Libya and Nigeria, a cut that would bring down OPEC’s current production by roughly 1.2 million bpd. Meanwhile, Saudi and other Gulf countries have indicated they are willing to have output cut as much as 1 million bpd.
Khalid Al-Falih, Saudi Arabia’s oil minister, has stated the country will want certain requirements to solidify a deal. Some of those requirements include that:
Hesitations are still being put forth by Iran, Iraq and Indonesia. Iraq has requested to continue raising output with no restrictions, while Iran wants to increase supply as its output has been hit by sanctions. Both countries also have conditions for deal participation which they have yet to disclose.
It is clear that the OPEC producers are on a path to contribute to helping the recovery of oil prices, but what remains unclear is what the cuts will look like. Will there be a freeze? Will a consensus be met at all? Time is ticking and we still don’t know the answer.