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Saudi Arabia has summoned some Opec+ energy ministers to Riyadh in a move that analysts said is a sign the oil cartel is preparing to set surprise production targets for 2025 at the group’s twice-yearly meeting on Sunday.
Kazakhstan’s energy minister was among those asked to travel to Saudi Arabia, two people familiar with the plans said. Ministers from Iraq and Russia may also travel to Riyadh, one of the people said.
Opec+ members were originally due to gather in Vienna this weekend before the meeting was moved online last week. An Opec+ spokesman said on Friday that the meetings would still be held virtually, raising the possibility that members in Riyadh would attend online alongside Saudi energy minster Abdulaziz bin Salman, who chairs the group.
Several Opec countries, particularly those that have invested in costly new production capacity, have been jostling to increase production in order to regain market share, and analysts close to Opec+ said there may be discussions in Riyadh over a headline target for 2025.
Since late 2022, the 22 member countries that make up the group, led by Saudi Arabia and Russia, have made a series of formal and voluntary cuts to their output which add up to around 5.8mn barrels of oil a day.
The curbs have helped support the price of crude, which has traded at between $74 and $93 a barrel since the start of the year, despite higher interest rates, rising non-Opec production, and concerns over global demand.
“What they’re trying to do is come up with a framework that allows them to start adding barrels back gradually depending on market conditions,” said Amrita Sen, the director of research at Energy Aspects, a consultancy.
“No one wants to be stuck with these cuts forever but equally they want to ensure market balance, so everything will be done in a phased manner,” she added.
The meeting of Opec delegates on Sunday was supposed to discuss a plan for the rest of this year’s production. But Jorge León, a senior vice-president at energy researchers Rystad, who previously worked at Opec, said the group could also put out a view for 2025 as well. “They will probably just come up with a single number: Opec+ is going to produce this much for next year,” he said.
“The question of how you unravel [the cuts] is really the big one,” said Raad Alkadiri, a veteran Opec watcher at the Center for Strategic and International Studies. But he cautioned that the group may not want to be too explicit at Sunday’s meeting.
“As a group, they are past masters at hinting and alluding without necessarily coming out with definitive statements. They could say, for example, they are going through the process of reassessment,” he said. “It may not be formally acknowledged, but this has been on the agenda for Opec meetings for a while now.”
Before exact 2025 quotas can be set for each member, Opec is waiting for three consultancies — IHS, Wood Mackenzie and Rystad — to make independent assessments of each country’s capacity. Those reports are due by the end of June, but one of the consultancies confirmed that Opec has asked to see a draft of its report ahead of Sunday’s meeting.
The subsequent negotiations are likely to be messy. “The problem is that when you look at demand estimates, and the supply from non-Opec members next year, there is really no room to increase Opec production next year,” said León. “The question within the group is how do we divide this cake that is likely to be smaller.”
In particular, the UAE, Iraq and Kazakhstan are pushing hard for a larger quota, while some African countries, including Nigeria, may not be producing as much oil because of under-investment.
While most analysts expect that Opec+ will commit to extending the voluntary part of the cuts until the end of the year, some noted that there is room in the short term to reintroduce more oil as demand picks up over the summer from refineries and drivers.
On the other hand, a number of Opec producers are already pumping past the levels they agreed, and both Saudi Arabia and the UAE are exporting more oil than they were in the second half of 2023, according to data from Vortexa.
“Perhaps the group may want to lay out a vision for 2025,” said Jim Burkhard, the head of oil market research at S&P Global Commodity Insights. “But if they do lay out a plan, history shows they will give themselves the potential to adapt if conditions turn out to be different in 2025.”