Oil Prices Tumble as OPEC+ Postpones Meeting; OPEC+ and IEA lock horns over renewables and peak oil demand!
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| OPEC+ and IEA lock horns... |
On November 22, 2023, the Organization of the
Petroleum Exporting Countries (OPEC) and Russia, collectively known as the OPEC+, surprised
the energy markets by announcing that their upcoming meeting, scheduled for
November 26, would be postponed.
The meeting had been scheduled to discuss the
production levels for the next year, 2024. Not only did the bad news shock the
market, but also pushed the price of oil down by more than 5%, as analysts sensed
that something has sprung into existence that was not conducive for the anticipated, further production cuts.
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| Hourly Oil prices - Monday |
A bone of contention, according to some analysts,
appears to be over the collective output: is it going to be maintained at the current level
or going to be deepened further? The OPEC+, however, implied that the cartel
wanted more time to gauge the global economic outlook before making a decision, despite
a space of one week being not enough to embark on a serious study on the issue in
question.
Whatever the merits of the claim, the prices of the two main benchmarks suffered significantly, as more factors making their impact felt
across the sector. The US crude stocks, for instance, have been increasing
steeply, indicating a weakening demand.
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| US crude oil stocks - EIA |
Of course, the postponement of the OPEC+ meeting
has created uncertainty in the oil market. What really matters is the decision
they are planning to make at the end of this month amid the furore: are Nigeria
and Angola finally coming on board to reach a consensus over their corresponding
baseline quotas? Only time will tell; i.e., in about 5 Earth days.
Meanwhile, in an extraordinary development, the IEA,
International Energy Agency and OPEC+ locked horns over statement made by the former,
titled, “Moment of Truth”, in which it said, “The industry has been told that
it must “choose between fueling the climate crisis or embracing the shift to
clean energy.” The OPEC+ hit back quite harshly by saying, “Whose moment of truth?”
OPEC Secretary General, Haitham Al Ghais, in
response, said: “It is ironic that the IEA, an agency that has repeatedly
shifted its narratives and forecasts on a regular basis in recent years, now
addresses the oil and gas industry and says that this is a ‘moment of truth’.
The manner in which the IEA has unfortunately used its social media platforms
in recent days to criticize and instruct the oil and gas industry is
undiplomatic to say the least. OPEC itself is not an organization that would
prescribe to others what they should do.”
That means, the members of the OPEC+ are determined to address
one of the main key issues facing the industry – the lack of long-term investment
due to uncertainty. The spat between the two key organizations that control the
energy sector, however, is adding yet another worry to existing ones of the
OPEC+ - and those of the consumers.
