Saudi Arabia could propose OPEC to cut the production by up to one million barrels per day in the group’s meeting to be started tomorrow, according to Bloomberg.
This eventual cut would be below levels proposed by some members of the group, which have proposed cutting up to 8 percent of the group’s supply. Currently, the group pumped more than 32 million barrels per day in November, above the 30 million bpd target set in the meeting of November 2014, ratified in June this year.
The news was spread one day before the beginning of the OPEC ordinary meeting, which has raised multiple rumors about the position to be taken by the different members of the group.
Initially, no change in the group’s position was expected as Saudi Arabia, the most iniuent member, was not willing to reduce the output unless non-OPEC oil producing countries took the same measures, which was unlikely, although it had stated to be willing to talk about all the issues.
Analysts and investors forecasted that the group would maintain its position, even more after Indonesia’s comeback to OPEC. However, conversations between different members seem to have u-turned after latest news on Saudi Arabia’s intentions.
In fact, the market has reacted with sharp increases after the news was revealed. At 11:00 hours (GMT + 1) the Brent increased 1.91 percent until reaching $43.30 per barrel. Yesterday, the barrel reached $42.43 after reaching a peak of up to $44.64.
For its part, the WTI increased at the same time by 1.45 percent to $40.51 per barrel. The US reference closed yesterday at $40.15.
Analysis by Francisco Neri Bonilla