Crude oil prices fall as OPEC reschedules meeting

Benchmark Brent crude was trading at $80.72 per barrel on November 23

Crude oil prices slipped nearly 1.5 percent on November 23 after members of the Organization of Petroleum Exporting Countries (OPEC) grouping delayed their planned meeting to next week, leaving the market cautious as traders took cues that the group was uncertain about further supply cuts.

Benchmark Brent crude was trading at $80.72 per barrel on November 23. Prices fell as much as 4.6 percent on November 22 following the OPEC announcement.

The revised schedule from OPEC comes at a time when oil prices are falling from the highs seen in September, as demand concerns mount from the world’s biggest energy consumer, China.

The stress was elevated for traders despite a series of supply cuts by Saudi Arabia over the past 12 months. ". The abrupt sell-off came as market concerns shifted from supply risks to the global economy and oil demand," Brokerage Yes Securities said in a report.

OPEC and its allies, commonly known as OPEC+, were scheduled to meet on November 26. That meeting is now set to be conducted on November 30, when the oil cartel might extend or deepen supply cuts to support crude prices.

OPEC members Saudi Arabia and Russia have already pledged output cuts of  5.16 million barrels per day in response to the falling oil prices and demand concerns. "Voluntary cuts are expected to keep supply in deficit with OPEC+ producing 0.9mb/d below the demand for its crude which has to be compensated by non-OPEC countries. Global supply for 2023 & 2024 to be dominated by non-OPEC+ producers," the brokerage added.

Last month, crude oil prices had jumped by about 5 percent—soon after Hamas launched a surprise large-scale attack on Israel on October 7—on worries that Gulf supplies could be affected. However, prices dropped as the conflict did not directly impact oil supplies.

Separately, sentiment is also being impacted after an oil spill incident in the Gulf of Mexico. Earlier this week, the US Coast Guard said that an estimated 1.1 million gallons of crude oil had leaked into the Gulf of Mexico from a pipeline off the coast of Louisiana.

Commenting on the crude oil situation, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “Even if OPEC goes for production cuts, the increase is unlikely to be large given the sluggish global growth and the consequent poor demand. Inflation in India will be manageable.”