Oil producer group Opec has begun its two-day meeting in Vienna, with expectations that the cartel and its allies will deepen oil supply cuts next year.
Opec+, a wider grouping that involves countries such as Russia, has curbed production by 1.2m barrels per day since 2017 in a bid to counter the rise of the US as the world’s largest producer.
Read more: Oil prices soar ahead of Opec meeting
Sources told Reuters that the group would consider increasing cuts by more than 400,000 barrels a day in order to support prices.
Saudi Arabia, the group’s de facto leader, is said to be keen on the move, in part to ensure favourable market conditions for Saudi Aramco’s initial public offering, the share price for which will be announced today.
On Tuesday Iraq, which is Opec’s second largest producer, said that Saudi Arabia was in favour of the move.
The Gulf kingdom has consistently over-complied with the quota cuts in an attempt to lead by example. But new energy minister Prince Abdulaziz bin Salman has said he wants more countries to share the burden.
Reuters reported Riyadh is keen to see members Iraq and Nigeria improve their compliance with the current cuts, which could see an additional reduction of up to 400,000 barrels per day.
Russia’s role in the talks is likely to be key. Energy minister Alexander Novak has suggested no decision on a cut extension needs to be made until closer to its expiry at the end of March.
He has also said he plans to ask Opec for Russia’s condensate production to be considered exempt from its quota, which could be a fractious issue.
If condensate is not taken into account, he said, Russia was already cutting more output than required under the agreement.
He added that co-operation between Russia and Saudi Arabia should continue.
Oil prices held yesterday’s significant gain, which was the biggest surge in over two months, ahead of the talks.