Crude futures rise as OPEC+ meeting set to start in Vienna

Front-month ICE Brent has gained by $1.86/bbl on the day, to $91.46/bbl at 09.00 GMT.

PHOTO: New reports suggest that Saudi Arabia and Russia will try to convince OPEC+ to cut production by as much as 2 million b/d at the meeting in Vienna, Austria today. Getty Images

Upward pressure:

OPEC and its allies (OPEC+) led by Saudi Arabia and Russia are contemplating a production cut as deep as 2 million b/d at its meeting in Vienna, Austria today, according to Reuters citing an OPEC source.

It was reported earlier that OPEC+ is considering cutting output by more than 1 million b/d. This will be the largest cut since the historic 9.7 million b/d cut in April 2020 - made after the pandemic slashed demand and pulled Brent levels as low as $9.12/bbl.

Downward pressure:

Fears of an impending recession has weakened expectations of future oil demand. Last month energy watchdog IEA cut its demand growth forecast for 2022 by 100,000 b/d to 2 million b/d, now forecasting demand growth to slow in the fourth quarter.

Leaders around the world, including International Monetary Fund and World Bank heads, have cautioned against the slowdown in economic growth caused by monetary tightening, urging policy course corrections from central banks to avoid long-term stagnation.

Several top investment banks have also sounded the alarm, with Swiss financier Credit Suisse warning that the worst is yet to come for global economies. Its German counterpart Deutsche Bank predicts there is a 50% chance of a recession in 2023.

Amin Nasser, Saudi Aramco's chief executive, has reiterated a grim outlook for the global oil and gas sector if demand exceeds supply. He said "the world should be concerned" about the lack of spare capacity.

By Konica Bhatt

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