LONDON – Oil prices tanked 4% on Wednesday as OPEC+ producers unexpectedly delayed a meeting on output planned for Sunday, raising questions about the future course of crude production cuts.
Brent crude futures was down $3.39, or 4.1%, to $79.06 a barrel by 1412 GMT. U.S. West Texas Intermediate (WTI) crude futures were down $3.26, or 4.2%, to $74.51.
OPEC+ delayed its ministerial meeting to Nov. 30 from Nov. 26 as previously scheduled, OPEC said in a statement, a surprise development that gave no reason for the postponement.
The meeting of OPEC+, which includes Saudi Arabia, Russia and other allies and members of the OPEC group of oil-producing countries, had been expected to consider further changes to a deal that already limits supply into 2024, according to analysts and OPEC+ sources.
Earlier on Wednesday, Bloomberg News reported that the OPEC+ meeting could be delayed for an unspecified period of time after Saudi Arabia expressed its dissatisfaction with other members about their output numbers.
Analysts had predicted before the delay that OPEC+ was likely to extend or even deepen oil supply cuts into next year.
Both Brent and WTI oil benchmarks have fallen for four straight weeks – the former down from near $98 in late September – pressured by rising supplies and concern about demand and a potential economic slowdown. The two contracts had climbed about 2% on Monday after three OPEC+ sources told Reuters the group, the Organization of the Petroleum Exporting Countries and allied producers, was set to consider more oil supply cuts when it meets on Nov. 26.
“The upcoming meeting has been the key central focus for oil prices for now, with sentiment shrugging off the sharp build in U.S. crude inventories,” said Jun Rong Yeap, a market strategist at IG, before the meeting delay announcement.
To support prices, OPEC and its allies will need to not only extend, but increase cuts, said John Evans of oil broker PVM in a note on Wednesday.
“A rollover of cuts and voluntary cuts will send the market south, for the current level of supply clamp is not enough to persuade the market that it is ‘tight’,” he said, also before the delay. “Oil is in for some tense and headline-reactive days.”
Earlier this week, an OPEC technical panel invited a top financial market dealer to give a presentation, seen by Reuters, which painted a bearish outlook for the oil market.
Even if the OPEC+ nations extend their cuts into next year, the global oil market will see a slight supply surplus in 2024, the head of the International Energy Agency’s (IEA) oil markets and industry division said on Tuesday.