The Wall Street Journal reported this week that Saudi Arabia, along with other members of the OPEC+ Oil cartel, are looking at increasing production when they meet in December. Saudi Arabia's energy minister denied the report and said that OPEC does not discuss its decisions before its meetings.
The cartel would benefit from a rapid turnaround if it could increase production. It cut production by 2,000,000 barrels per day last month.
Oil prices are falling despite these output cuts. Kpler analyst Matt Smith said that this is largely due to China's zero-COVID policy.
He stated that there are renewed lockdowns and high cases in China. This means that oil demand in China, which is the largest importer of crude oil in the world, remains low.
Smith said that OPEC members would like oil prices to rise because their budgets are dependent on higher prices. Accordingly, Smith said that OPEC members would like to see production cut further at their December meeting.
Sara Vakhshouri, with SVB Energy International, stated that OPEC could increase production if supplies become too tight. Europe is set to reduce imports of Russian oil. This means that there will be less supply.
It is also cold.
Vakhshouri stated, “Looking ahead to the next month, it might have colder temperatures, which would mean higher demand.”
Vakhshouri stated that if oil prices remain low, it is unlikely that OPEC will increase production.