LONDON: A deeper cut in oil supplies is among options for OPEC and its allies to consider in December, its secretary general said on Thursday as the producer group’s forecasts pointed to slower global growth and lower demand next year.
OPEC, Russia and other producers, an alliance known as OPEC+, have since January implemented a deal to cut oil output by 1.2 million barrels per day to support the market. The pact runs to March 2020 and the producers meet to set policy on Dec. 5-6.
“The conference will take appropriate, strong, positive decisions that will set us on the path of heightened and sustained stability for 2020,” Mohammad Barkindo said at a briefing in London.
“All options are open,” he said, when asked about the prospect of a deeper oil supply cut.
Oil prices have failed to gain a lasting boost from supply disruptions this year, including the attack last month on Saudi Arabian oil installations that briefly shut down more than half of production in the world’s top exporter.
Brent crude was trading near $58 a barrel, down from a 2019 high near $75 in April. Concern about weaker economies and demand due to uncertainties such as Brexit and the US-China trade dispute have overshadowed lower supply.
While the last meetings of OPEC and its allies in July decided on supply for the next nine months, the next meeting in Vienna will likely take a longer view.
“We will be faced with real data for 2020 that will enable us to review the current arrangement and come up with a decision that probably will cover the whole of the year,” Barkindo said.
OPEC separately released its October monthly oil market report on Thursday in which it trimmed its forecast for world economic growth in 2020 to 3 percent from 3.1 percent, saying “it seems increasingly likely that the slowing growth momentum in the US will carry over to 2020.”
Barkindo sounded a more upbeat tone, saying data was preliminary and could surprise to the upside.
In a forecast that could press the case for further supply restraint, OPEC predicts a drop in demand for OPEC crude next year due to higher supply from rivals such as the US.