A return to oil production cuts by OPEC and its allies next year cannot be ruled out, a senior OPEC source said on Wednesday, to avert a possible supply glut that could weigh on prices.
The source was responding to a report by Russia’s TASS news agency that Russia and Saudi Arabia had started bilateral discussions over possible curbs to output in 2019.
Saudi-led OPEC and its allies including Russia decided in June to relax output curbs in place since 2017, after pressure from US President Donald Trump to reduce oil prices and make up for supply losses from Iran.
A second delegate from the Organization of the Petroleum Exporting Countries, asked whether discussions pointed to a return to supply cuts in 2019, said: “Certainly not the other way around.”
Oil prices have come under downward pressure from rising supplies, even though Iranian exports are expected to fall because of new US sanctions. Forecasts of a 2019 supply surplus and slowing demand have also dented the market.
Brent crude had dropped from a four-year high in October above $86 a barrel to $71 on Tuesday. Prices rallied back above $73 on Wednesday, supported by the TASS report.
A ministerial committee of some OPEC members and allies meets on Sunday in Abu Dhabi to discuss the market and outlook for 2019.
This group, called the JMMC, could make a recommendation on 2019 output policy to the next decision-making meeting of OPEC and non-OPEC oil ministers, a third OPEC source said. That meeting takes place on December 6-7 in Vienna.
“Any serious discussion will be towards the December meeting,” this source said.