Goldman voices concerns about OPEC+ future as decision on output curbs nears | Reuters

Goldman voices concerns about OPEC+ future as decision on output curbs nears | Reuters

As the OPEC+ group’s decision on oil production cuts nears, there are renewed concerns about the future of the organization as it tries to rebalance the market while securing higher revenue and market share in the medium-term, Goldman Sachs said in a note.

OPEC+, comprising the Organization of the Petroleum Exporting Countries, Russia and other producers, is scheduled to meet on Nov. 30 and Dec. 1, and is likely to discuss extending oil output curbs into next year due to weak demand amid surging COVID-19 infections.

“Potentially complicating the meeting could be a push by the UAE to raise its baseline quota which screens as low relative to that of Saudi and Russia, although we don’t think this will derail an extension,” Goldman said.

The bank sees a coordinated move to restrict output as the best near-term action for oil prices, given the high levels of crude inventories, Libya’s production recovery, and a new wave of coronavirus infections leading to renewed partial lockdowns.

Goldman expects OPEC+ to delay its production ramp-up for three months, helping bring the global market deficit back to 1 million barrels per day in the first quarter of 2021.