The oil producers group known as OPEC Plus met on Thursday and failed to announce new production cuts in the face of sagging prices, but Saudi Arabia later said that it would continue to trim output by one million barrels a day through March, in coordination with some other countries that were not named.
Oil traders, who may have expected more substantial cuts, had a chilly response to the news. Futures fell for the day, with Brent crude down 0.4 percent, to $82.80 a barrel, and West Texas Intermediate falling more than 3 percent, to $75.25.
“Early indications are that this is disappointing for the markets compared to the expectations that had built up over the last week,” said Richard Bronze, head of geopolitics at Energy Aspects a research firm. News reports of production cuts preceded the meeting.
OPEC Plus said that Brazil, an oil giant that until now has not been part of the producers group, was expected join next year. Alexandre Silveira de Oliveira, Brazil’s minister of mines and energy, attended the teleconference meeting and confirmed that his country would join in 2024, pending a review of documents. Brazil, however, will not cut output.
As one of the world’s fastest growing oil producers, Brazil would add to the firepower of OPEC Plus, which already produces more than 40 percent of the world’s oil supplies. Brazil is South America’s largest oil producer, and is expected to pump about 3.8 million barrels of oil a day next year, according to the International Energy Agency.
The meeting, which was originally planned for last weekend, had been was postponed, raising concerns that a consensus would be hard to reach.
The choices on the table were not appealing for the oil officials. The question was essentially how much to restrain output and how to parcel out the pain.
OPEC Plus has already made a series of production cuts to maintain prices over the last year, and there are few signs of relief in 2024.
Global demand for oil is expected to slow sharply in 2024 amid an economic slowdown in China, the largest importer, and tepid growth prospects for much of the global economy.
At the same time, analysts forecast, the United States, Guyana, Brazil and other producers outside OPEC Plus are likely to increase output to soak up the modest increase in demand.
Because oil revenues are key to funding the government budgets, domestic social programs and investment plans of many of member countries, decisions on matters like output ceilings are highly sensitive.