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Oil prices slipped on Monday as reports of disputes among OPEC+ members on their production quotas next year heightened supply uncertainties amid higher demand expectations during the first quarter of 2024.
International benchmark crude Brent traded at $79.81 per barrel at 9.56 a.m. local time (0656 GMT), a 0.83% decrease from the closing price of $80.48 a barrel in the previous trading session on Friday.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $74.90 per barrel, down 0.84% from Friday’s close of $75.54 per barrel.
Brent oil fell below Saudi Arabia’s floor price of $80 a barrel, raising the possibility of a rollover of the current production cuts or a further increase to these levels.
Saudi Arabia has been imposing an output cut of approximately 1.5 million barrels per day (bpd) that will continue until the end of the year, on top of its contribution to the group’s joint cut of 2 million bpd to extend until the end of 2024.
Meanwhile, the most recent oil market analysis from the International Energy Agency shows that the first quarter of next year will see an average of 101.5 million barrels of oil consumed globally. If OPEC+ production cuts continue, the average global oil supply is expected to reach 102.8 million barrels per day over that time. Despite production reductions, this represents a surplus of almost 1.3 million barrels per day.
Uncertainty in the market has further intensified after the group’s decision to postpone its much-anticipated meeting by four days, from Nov. 26 to Nov. 30, when decisions are expected over the production quotas to be imposed from January onwards.
There are divisions in the organization because some members want to expand production in response to forecasts of a rise in demand in the first quarter of next year.
Investors are now monitoring the statements of US Fed officials to seek direction about the next interest rate decision of the world’s largest economy, the US. Market players will also follow macroeconomic data from China.
Although the four-day humanitarian pause during the Israel-Palestine conflict temporarily eased concerns about the possible impacts on oil trading routes, tension in the region has intensified after the Israeli Chief of General Staff Herzi Halevi said Israel would resume pressure “to release most of the hostages held in Gaza.”
