President Donald Trump has tweeted that they shouldn't cut production, setting up a standoff between the US administration and OPEC before it meets in Vienna on December 6. They have lost over a quarter of their value since early October in what has become one of the biggest declines since prices collapsed in 2014. Oil prices should be much lower based on supply!
Oil prices, which spiked in October in the run-up to the reimposition of USA sanctions on Iran's oil industry on November 5, fell after the U.S. granted waivers to eight countries importing Iranian crude for a 180-day period.
Oil demand is slowing as the world economy decelerates - OPEC nudged down its 2019 growth forecast in the report. The agreement struck in 2016 was the first such alliance between Opec and the Russia-led group.
While OPEC and its allies including Russian Federation had been pumping more in anticipation of Iran's exports falling to zero, de facto group leader Saudi Arabia now says the producers should reverse about half the output increases they made earlier this year.
But since May, Opec+ have ramped up output while at the same time the USA continued to grow its oil production, which reached a record of 11.6 million bpd earlier this month.
Meanwhile, global economic growth is under threat from heightened trade tensions, economic instability in some emerging markets and uncertainty over the UK's exit from the European Union.
But Trump has made it clear he wants oil prices to fall. "OPEC NGLs in 2018 and 2019 are expected to grow by 0.10 mb/d and 0.11 mb/d to average 6.34 mb/d and 6.45 mb/d, respectively". Tuesday's seven-percent drop was due to ongoing worries about weakening global demand and oversupply.
The 14-member Opec expects oil supply from its rivals to outpace its own output next year.
Cutting short the 10-day selling trend, crude oil prices rose by around 1 per cent to touch $71 per barrel mark on Monday after the world's largest oil exporter Saudi Arabia announced plans to cut production by 500,000 barrels per day from December and called for a global output cut of one million barrels per day to support oil price.
A proposal to reduce oil supply by 1.4 million was one of the options that the OPEC/non-OPEC joint committee discussed at their meeting in Abu Dhabi on Sunday, according to Reuters's sources, who added that OPEC's Iran and the leader of the non-OPEC group Russian Federation have yet to be convinced to back such a proposal.