Oil Prices Tumble as OPEC+ Postpones Meeting; OPEC+ and IEA lock horns over renewables and peak oil demand!

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.

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.

US crude oil stocks - EIA

Analysts, meanwhile, in the absence of a serious impact from the war in the Gaza Strip on the production or prices, are divided on the outlook for oil prices following the postponement of the OPEC+ meeting. Some believe that prices could fall further in the near term, while others believe that prices could rebound once the group meets and reaches a decision on production levels.

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.