LONDON, Nov 2 (Reuters) – Top oil exporter Saudi Arabia will probably reconfirm in the coming days the extension of its voluntary oil-output cut of 1 million barrels per day through December, six analysts told Reuters.
Oil hit a 2023 high in September near $98 a barrel for Brent crude, although it has since weakened to trade around $86 on Thursday. Concerns about economic growth and demand have weighed on prices, despite support from conflict in the Middle East.
Saudi Arabia first made the voluntary cut for July as an addition to a broad supply-limiting deal reached in June by OPEC+. The kingdom said in September it would extend the cut until the end of the year, and review the decision monthly.
“As Saudi Arabia and OPEC+ follow a ‘proactive, preemptive and precautionary policy’, and considering ongoing economic growth concerns, I would expect Saudi Arabia to announce an extension of their voluntary production cut,” said UBS analyst Giovanni Staunovo.
The Saudi energy ministry did not immediately respond to a request for comment on whether the cut would be maintained in December.
Five other analysts told Reuters they also expected Saudi Arabia to keep the cut for December – and also that they saw a possibility of it being maintained beyond that month.
Based on the kingdom’s practice in previous months, the decision on keeping the cut for December will likely come in an early November statement. Any moves regarding 2024 would be unlikely ahead of the next OPEC+ meeting on Nov. 26 in Vienna.
The last meeting of OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, made in June already limits supply into 2024.
“We think Saudi Arabia is likely to extend its voluntary cut beyond end-December,” analyst Richard Bronze of consultancy Energy Aspects, told Reuters.
“Caution has been a watchword for Saudi oil policy throughout the year and with various warning lights flashing for the global economy and oil demand they are going to be very careful about raising production.”
Ole Hansen of Saxo Bank, Tamas Varga of oil broker PVM, Callum Macpherson of Investec and Helima Croft of RBC Capital Markets also said they saw the chance of the cut staying in place for December and possibly longer.
“Saudi Arabia is very unlikely – given the current price level and seasonal demand weakness – to consider a production increase, not for December and most likely not during the first quarter either,” Hansen said.
Reporting by Alex Lawler, Natalie Grover, Maha El Dahan and Ahmad Ghaddar, editing by Dmitry Zhdannikov, Simon Webb and Jonathan Oatis
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