Opec+ switches to online meeting as market expects cuts to continue

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Opec+ has cancelled its formal meeting in Vienna next week in favour of a video conference, in a sign that there may already be broad agreement for members to rollover existing oil production cuts.

Members of the extended oil cartel will now meet online, rather than in person, on June 2 to decide production policy for the second half of the year. 

No reason was given for the shift, although some people in contact with delegates suggested that concerns over the health of 88-year-old King Salman of Saudi Arabia had contributed to the decision. Saudi energy minister Abdulaziz bin Salman, who chairs Opec, is the king’s son.

The group has only held two in-person gatherings since the start of the Covid pandemic. 

The 22 members of Opec+, led by Saudi Arabia and Russia, made a similar switch last November, after disputes with African members about quotas that eventually led to Angola quitting the group. This time, discussions “are expected to be smooth”, said Amena Bakr, an analyst at Energy Intelligence.

Most analysts expect Opec’s members to roll over for a second time a voluntary cut of 2.2mn barrels per day agreed last November, as they try to shore up prices against higher US production and an uncertain economic outlook in China. 

The price of the benchmark Brent crude is near three-month lows, trading at just over $81 a barrel on Friday morning. “I think they are going to roll over the cuts,” said one person close to several Opec delegates. “I have heard that directly and indirectly from two members,” the person added. 

“The failure to hold on to the $90 handle, the preferred price for most Opec+ producers [means] an extension of the current production cuts at the June meeting will be the most likely outcome,” said Ole Hansen, head of commodity strategy at Saxo bank.