Stuck between a slowdown in global growth, plentiful stocks and still fragile prices, OPEC and its partners, meeting Thursday and Friday in Vienna, should once again extend the reduction in their level of crude production.
This reduction, set at 1.2 million barrels per day (mbd) since December 2018 compared to the October level of the same year, has already been extended until March 2020 at the last conference of the Organization of oil exporting countries (OPEC) in July.
It could be extended "until June, on the occasion of the next summit", according to Tamas Varga, analyst at PVM, or even "until the end of the year 2020" according to other analysts like Andy Lipow, from Lipow Oil Associates.
The organization has already sent a strong signal: its economic committee said last Thursday that the oil market would be "balanced" in the event of maintaining current production limitations in 2020.
- Reduced maneuvering margin -
The global economic context calls on the cartel countries to be cautious: the trade war is weighing on Chinese growth, which is very greedy for oil, while that of Europe, another area of strong demand, remains weak.
Production levels in non-OPEC countries are breaking records: the United States, the world's largest producer since 2018, extracts large quantities of shale oil, Brazil and Canada have also increased their production and others like Norway plan to do it.
In addition, the United States has huge stocks, of the order of 452 million barrels, according to the latest figures released last Wednesday by the US Energy Information Agency (EIA).
This plethorous supply of black gold restricts OPEC's room for maneuver which, according to analysts, has no choice but to turn around in order to ensure its objective of maintaining "fair and stable prices for producers "- its declared mission.
Prices have been relatively stable since the previous meeting, hovering around $ 60 a barrel for Brent - the European benchmark - except for a spike in September following attacks on Saudi oil facilities.
If this level seems comfortable for Russia - its 2019 budget is calculated on the basis of about $ 42 a barrel - it is too low for others like Saudi Arabia whose budget would require a much higher price, and this despite a cost of production among the lowest in the world.
- Quotas and dissensions -
Upstream of the summit, doubts hover over the position of Russia. The second largest oil producer, with whom Opep has been associated since the end of 2016 via the Opep + agreement, has been blowing hot and cold in recent weeks.
Russia regularly exceeds its production limits imposed by the agreement, as well as Iraq or Nigeria, Africa's largest oil producer, whose budgets are heavily dependent on the price of black gold.
On the other hand, Saudi Arabia is a good student in terms of quota: it remains below the limits and reminded its partners in September. The reduction of OPEC's production, and therefore its strategy, "rests on the shoulders of Saudi Arabia," says Lipow.
The Kingdom may want to "go further in the cuts," said Neil Wilson, an analyst at Markets.com, to maximize the income of the IPO of the national oil company, Aramco, scheduled this month.
The transaction has been shifted several times and would be at a valuation level lower than initially expected, around 1.700 billion dollars.
Attacks on some of its installations in September, claimed by Yemen's rebels, highlighted its vulnerability - production capacity was halved for a time - and rekindled tensions with Tehran, accused by Ryad of "sponsoring" these attacks.
© 2019 AFP