The group of oil producers known as OPEC Plus met on Thursday and did not announce new production cuts in the face of falling prices, but Saudi Arabia later said it would continue to cut output by one million barrels a day through March, in coordination with some other countries that were not named.
Oil traders, perhaps hoping for more substantial cuts, had a cool response to the news. Futures fell during the day, with Brent crude falling 0.4 percent to $82.80 a barrel and West Texas Intermediate falling more than 3 percent to $75.25.
“Early indications are that this is disappointing for markets compared to the expectations that had been building up over the last week,” said Richard Bronze, head of geopolitics at Energy Aspects, a research firm. News of production cuts preceded the meeting.
OPEC Plus said Brazil, an oil giant that until now was not part of the producer group, was expected to join next year. Alexandre Silveira de Oliveira, Brazil’s Minister of Mines and Energy, attended the meeting via teleconference and confirmed that his country would join in 2024, pending a review of the documents. Brazil, however, will not cut production.
As one of the world’s fastest-growing oil producers, Brazil would add to the firepower of OPEC Plus, which already produces more than 40 percent of the world’s oil supply. Brazil is South America’s largest oil producer and is expected to pump around 3.8 million barrels of oil per day next year, according to the International Energy Agency.
The meeting, which was originally scheduled for last weekend, had been postponed, raising concerns that consensus would be difficult to reach.
The options on the table were not attractive to oil officials. The question was essentially to what extent to restrict production and how to spread the pain.
OPEC Plus has already made a series of production cuts to support prices over the past year, and there are few signs of relief in 2024.
Global oil demand is expected to slow sharply in 2024 amid an economic slowdown in China, the largest importer, and tepid growth prospects for much of the global economy.
At the same time, analysts forecast, the United States, Guyana, Brazil and other non-OPEC Plus producers are likely to increase production to absorb the modest increase in demand.
Since oil revenues are key to financing government budgets, domestic social programs and investment plans of many member countries, decisions on issues such as production ceilings are very delicate.