OPEC and Russia meet with significant oil production cuts on the table

It is widely expected that OPEC and its allies, including Russia, will agree Significant decline in oil production In order to boost prices when officials meet in Vienna on Wednesday.

The meeting is likely to be attended by Russian Deputy Prime Minister Alexander Novak, who has played a key role in strengthening cooperation with the Organization of the Petroleum Exporting Countries (OPEC). The presence of Mr. Novak, who is under US sanctions, may be an embarrassment to European officials when their citizens face a harsh winter due to the Russian war in Ukraine.

Analysts say a very large cut in the order of 2 million barrels per day, or about 2% of global supply, may be on the table.

The group’s gathering, known as OPEC Plus, is the first to be held in person since the early days of the pandemic. Analysts say that indicates the intention to make a strong statement to energy markets about the group’s cohesion during the fighting in Ukraine and its willingness to act quickly to defend prices.

But the meeting also comes amid heightened political intentions and economic factors.

In the Pressure for higher oil pricesThe Kremlin may use Saudi Arabia, the de facto leader of OPEC, whose ministers want future cooperation from Moscow on energy matters, to make action against Russia more costly to the West.

“To the extent that prices are rising, it will make it more difficult for Europe to move forward with its sanctions on Russian oil in December,” said Bhushan Bahri, CEO of S&P Global Commodity Insights.

A big production cut would be a blow to the Biden administration, which did it pressure on the Saudis to increase production. Saudi officials have expressed concern that demand for oil could weaken due to the faltering global economy.

“They are looking for ways to surprise the market or at least deliver what the market is expecting,” said Richard Bruns, head of geopolitics at Energy Aspects, a London research firm.

Expectations of a major move by producing countries in recent days helped raise prices for Brent crude futures, the international standard, to around $92 a barrel from around $83.

The group may also announce the extension of the comprehensive cooperation agreement between OPEC, Russia and other producing countries, which is due to expire in December.