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Daily Updates | Oil Prices Slump as OPEC+ Delays Meeting Amid Production Cut Negotiations

Oil Prices Slump as OPEC+ Delays Meeting Amid Production Cut Negotiations

Oil Prices Slump as OPEC

Amid the news of the OPEC+ meeting delay, the entire oil market took a downturn. The oil prices fell as much as 5% and took other industries down as well that relied heavily on oil.

Wednesday morning saw a sudden collapse in the price of oil as the upcoming meeting of OPEC+, scheduled for this weekend, was postponed to November 30. OPEC+, which stands for petroleum exporting countries and their allies, did not clarify the delay, but experts suggested that it was due to Saudi Arabia’s dissatisfaction with voluntary production cuts. The parties of OPEC+ could not agree on production cuts during their discussion, and as a result, the meeting was postponed.

To ensure uncertainty around the world regarding the OPEC+ conflict, several oil contracts were sold. OPEC+ started slashing production in the middle of November 2022, then in April 2023, when oil prices went record low in March. The decision to delay the conference, which was initially planned for this weekend, illustrates how stressful it is for oil-producing countries that are a part of OPEC+ to coordinate their production quotes. Due to this delayed conference, there were substantial worries about oversupply, which could negatively impact the market even further.

The state-run Saudi Arabian Press also declared that they would adhere to their cutting of one million barrels a day, which initially came into effect this July.

Russian Deputy Vice President Alexander Novak said “Current oil prices reflect the current situation; they are at a sufficient level, and because of that, the market is completely balanced”. However, experts suggest that Russia is also set to follow production cuts until the end of 2023 to strengthen oil prices.

In addition, worries over consistent geopolitical issues and recessionary waves exacerbated market anxiety. However, falling oil prices elevated the stocks of airlines and took some pressure off consumers. Share prices of United Airlines, Delta Airlines, cruise operator Carnival, and American Airlines saw strong gains amid the news.

Futures such as West Texas Intermediate Crude and Brent Oil slipped 1.2% and 1.4% to end up at $76.19 and $80.80 a barrel, respectively. As of now, the delay of the conference suggests a further supply chain cut from OPEC+.

Industry participants are coming up with various speculations for possible results that may further swing oil prices in any direction. Not only them, but the energy market also awaits the new meeting schedules for November 30 as of now. The red candles in oil prices due to the delay in the OPEC+ meeting underline the weak balance between supply and demand in the global oil market. Geopolitical conflicts could be the major reason for that.

In conclusion, the recent decline is caused by disagreement among OPEC+ countries that forced them to push their meeting. The oil market is in full swing due to uncertain OPEC+ plans. It remains to be seen how much the meeting on November 30 will affect the global oil market’s overall stability and pricing.

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Key Takeaways

  • OPEC+ postponed the conference to November 30; reports suggest some disagreement among the group.
  • Oil prices saw a sharp decline following the news.
  • Airline and industrial stocks, for which fuel is the major expense, reported strong gains.

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