Crude oil posted sharp losses over delayed OPEC+ meeting

Wednesday was a volatile trading day for the crude oil market as both Brent and WTI fluctuated up to 4% down, after a surprising move by the OPEC group and its allies including Russia, to push back from this weekend to Nov. 30, a much-anticipated output policy meeting, triggering speculation the producers might cut output less than earlier anticipated next year due to opposing African members.

The price of the Brent crude oil contract settled at $81.15/b, or 1% down, after falling as much as 4% to $79/b on Wednesday, while the WTI price ended at $76.40, after declining as much as 5% to $73.80/b during the day.

Brent crude oil, 30-minutes chart

The Organization of the Petroleum Exporting Countries and its allies including Russia (also known as OPEC+) expected to discuss crude oil output cuts on Sunday, Nov. 26, but the meeting was unexpectedly delayed to Nov. 30, as the members of the cartel were struggling to agree on output levels and hence possible reductions.

In a surprise episode on Wednesday, some small African oil producers, including Angola, Congo, and Nigeria which some of them have struggled to meet their production quota, refused to agree on lower production levels for 2024.

The trio of African countries were seeking to raise their 2024 supply quotas above the provisional levels agreed at the OPEC+ June 2023 meeting. Angola and Congo have been producing below their 2024 production targets, while Nigeria has been able to increase output above target due to the improving security situation in the oil-rich Niger Delta.

OPEC’s de facto leader Saudi Arabia, together with Russia, wants to continue the production cut policy from the members and their unilateral output cuts to keep oil prices above the $80/b level, especially as the energy market forecasts a weaker demand growth in the first quarter of 2024 due to an economic recession, together with higher supply growth from the USA, Brazil, Guyana, and Iran.