The world may be heading for an even greater oversupply of oil, and that possibility – which could drive down fuel and energy prices – is hanging over members of the OPEC cartel as they head into negotiations today.
The oil-producing nations will decide whether to stick with production cuts they've endured for the past three years, relax them or deepen them in the hopes of propping up prices.
They're negotiating through a tangle of tensions driving members in competing directions.
Saudi Aramco's stock market debut, which will get off the ground Thursday when the state-run oil giant prices its shares, has put Saudi Arabia in a precarious position as it bets on what volume of oil production will hit a sweet spot for prices, with the added pressure of considering the interests of its shareholders. The nation is already bearing the burden of the largest share of OPEC's production cuts.
But some nations such as Iraq have been ignoring the agreement and producing more than their allotted amount.
“If people are already not complying to the current agreement, what's the point to those that are complying cutting more? So the others can go on cheating?” said Bhushan Bahree, executive director of global oil at research group IHS Markit. “I think the Saudi position is they're willing to cut more if needed, but they want better compliance.”
Brent crude oil hovered around $61 per barrel Wednesday afternoon. Prices have fluctuated throughout the year, reaching nearly $75 per barrel in April after U.S. sanctions on Iran and Venezuela limited world supply, but lingering trade tensions between the U.S. and China dampened economic expectations, pushing prices back down.