Opec and its allies are discussing deepening oil production cuts, possibly by as much as one million barrels per day, three sources told Reuters on Friday as oil prices fell towards US$70 (RM320.42) per barrel and market analysts spoke of a new supply glut.
Opec+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, pumps around 40% of the world's crude, meaning its policy decisions can have a major impact on oil prices.
Three Opec+ sources said cuts were being discussed among options for Sunday, when Opec+ ministers gather at 2pm in Vienna (1200 GMT). Before then, Opec ministers will meet at 11am on Saturday.
The sources said cuts could amount to one million bpd on top of existing cuts of two million bpd and voluntary cuts of 1.6 million bpd that was announced in a surprise move in April.
If approved, it would take the total volume of reductions to 4.66 million bpd, or around 4.5% of global demand. Earlier, two Opec+ sources said they did not expect the group to agree further cuts.
Western nations have accused Opec of manipulating oil prices and undermining the global economy through high energy costs.
In return, Opec officials and insiders have said the West's money-printing over the last decade has driven inflation and forced oil-producing nations to act to maintain the value of their main export.
"We will never hesitate to take any decision to achieve more balance and stability (on) the global oil market," Iraq's Oil Minister Hayan Abdel-Ghani said on arriving in Vienna.
The surprise output announcement in April helped to drive oil prices about US$9 per barrel higher to above US$87, but they swiftly retreated, under pressure from concerns about global economic growth and demand. On Friday, international benchmark Brent was trading around US$76.
Last week, Saudi Arabia's Energy Minister Prince Abdulaziz said investors who were shorting the oil price should "watch out", which many market watchers interpreted as a warning of additional supply cuts.
Russian Deputy Prime Minister Alexander Novak, however, subsequently said he did not expect any new steps from Opec+ in Vienna, Russian media reported.
The International Energy Agency expects global oil demand to rise further in the second half of 2023, potentially boosting oil prices.
Analysts at JP Morgan, however, said Opec had not acted quickly enough to adjust supply to high levels of US fuel output.
"Demand growth continues to be robust. Rather, there is simply too much supply... The alliance waited too long to reduce supply. The alliance – or at least some members – would likely need to cut more," analysts from JP Morgan said in a note.
Rapidan Energy Group analysts put the chances of a further cut at 40%.
"Ministers are determined to avoid a repeat of 2008, when a sudden collapse in global economic and financial stability sent crude prices from over US$140 to US$35 in six months," they wrote.