In a Shaky Oil Market, OPEC Has Bitter Decisions to Make

These are tricky times for the world’s major oil producers: Prices are lower, the health of the global economy is uncertain, and, even as the Organization of the Petroleum Exporting Countries tries to cut output, supplies from other producers, notably the United States, are growing.

No wonder the group postponed its year-end meeting. Initially scheduled for last weekend in Vienna, the meeting is now planned for Thursday, barring another postponement. The agenda — whether to cut production further, and by how much — is likely to be unpalatable for many of the 23 members.

The price of Brent crude, the global benchmark, has fallen to about $82 a barrel, from a high of more than $96 this year and $128 at its height early in the Ukraine war.

It has dropped even as producers in OPEC Plus, a bigger group that includes Russia, have cut production, but the coming months seem unlikely to give oil producers a respite from this squeeze.

After three years of pandemic recovery and robust increases in demand for oil, appetite is expected to slow in 2024. The main reasons: China, which accounted for three-quarters of global demand growth in 2023, is facing an economic slowdown. Overall economic expansion is expected to be tepid while more efficient energy use and increasing numbers of electric vehicles reduce oil consumption. With production expected to increase outside of OPEC Plus, there will be little need for increased output from the producers group in the early part of 2024 or, perhaps, longer, analysts say.