Opec+ stays the course, keeps quota unchanged: Update

Adds quote from communique, details on next meeting

The Opec+ group today agreed to stay the course and make no change to its crude output target for the start of next year.

The decision to roll over the 2mn b/d quota cut that was agreed at the previous ministerial meeting in October comes against a background of lingering concerns over the outlook for the global economy, but also several key uncertainties on both the supply and demand sides of the equation going into next year. A major source of uncertainty is what impact the EU's embargo on seaborne Russian crude imports and the G7's price cap on Russian shipments to third-party countries will have on supply. The embargo and price cap come into force tomorrow, 5 December.

The G7 agreed on 2 December to set the initial price cap on the sale of Russian seaborne crude to third-party countries at $60/bl - a level it hopes will allow Russian oil to continue flowing while limiting Moscow's revenues. Kremlin spokesman Dmitry Peskov has since reiterated that Russia "will not accept" the price cap and is discussing internally how to respond, according to state news agency Tass. Russian deputy prime minister Alexander Novak has previously said Russia's response could entail diverting crude to those countries that refuse to abide by the cap and/or reducing production altogether.

Besides the uncertainty over Russian supply, Opec+ ministers have had to take into account weak economic data from China, which, along with central bank action to combat inflation, have put downward pressure on oil prices in recent weeks, wiping out most of the price gains that followed the group's October decision to lower its output target by 2mn b/d from November through until the end of 2023.

In its formal communique following today's meeting, the Opec Secretariat said the 2mn b/d cut was "purely driven by market considerations and recognized in retrospect by the market participants to have been the necessary and the right course of action towards stabilizing global oil markets".

Today's decision to stay the course was no surprise - in the run-up to the meeting, delegates told Argus the group was coalescing around keeping production targets unchanged at November-December levels until there is more clarity in the market. "There are so many moving pieces at the moment, and so much uncertainty," one delegate said. "How can we decide on policy when there are such serious unknowns."

This lack of clarity contributed to a decision by Opec and the wider Opec+ coalition to scrap their planned in-person meetings in Vienna this weekend in favour of more discreet online gatherings. Delegates said Opec+ could feasibly set a date to meet in person in the not too distant future once the market impact of the price cap plan is better understood.

The next Opec+ ministerial meeting has been set for 4 June, but the group today reiterated its flexibility, saying members are ready "to meet at any time and take immediate additional measures" in response to market developments if necessary. The group's Joint Ministerial Monitoring Committee (JMMC), which makes output policy recommendations, will next meet on 1 February, in line with a bi-monthly schedule agreed in October.

By Nader Itayim, Ruxandra Iordache, Bachar Halabi and Kuganiga Kuganeswaran