Oil prices dropped more than 4% on Wednesday after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, announced the delay of an important meeting that was scheduled for Sunday. The meeting was anticipated to address potential further cuts to global oil production.
By late morning ET, Brent crude, the global oil benchmark, fell by 3.7% to $79 a barrel, while West Texas Intermediate (WTI) crude, the U.S. benchmark, dropped 3.8% to $75 a barrel.
This decline in oil prices could offer some relief to U.S. drivers heading into the Thanksgiving holiday weekend, with the average price of regular gasoline at $3.28 per gallon, according to AAA. This marks an 8% drop in the past month and a 10% decrease compared to the same time last year.
OPEC+ stated that the ministerial meeting, originally planned for Sunday, would be postponed until November 30. No specific reason was given for the delay, but Reuters reported that the postponement stemmed from disagreements over current production levels among some members and potential cuts. Bloomberg also reported dissatisfaction from Saudi officials regarding the output levels of certain OPEC members.
Craig Erlam, senior market analyst at OANDA, noted that the price drop following the delay suggested that traders were concerned about a lack of consensus on the scale of production cuts for the coming year.
Brent and WTI have experienced price declines for four consecutive weeks, mainly driven by record production levels in the U.S. and fears of weakening global demand, particularly from China, the world’s largest oil importer. Since late September, Brent prices have fallen 18%, and WTI has entered a bear market, down 20% from its peak that month.
Despite OPEC+ pledging to cut its total output by 1.66 million barrels per day through the end of 2024 and additional voluntary cuts by Saudi Arabia and Russia, prices have continued to decrease.
Jorge León, senior vice president at Rystad Energy, expressed caution, suggesting that while a deadlock between OPEC+ members couldn’t be completely ruled out, the meeting was still expected to result in an agreement. However, he noted that negotiations would likely be difficult, especially for countries like Russia and Nigeria, who may resist further production cuts.
