Tomorrow is going to be the first time after two years that OPEC+ ministers will meet in person. The technical committee meeting that happens before the ministerial has been canceled. According to various reports that are circulating, the quantum of cuts can range from 1 to 1.5 mn bbl per day this would exclude any voluntary cuts.
This will be putting further pressure on the already tight physical oil supply. The reason that such high levels of cuts are being considered is the risk of a recession that might occur next year.
The problem of supply does not stop here, currently, the USA is releasing 1 mn bbl per day from its Special Purpose Reserves ( SPR ) which has reached the lowest levels since 1984 reducing the probability of extension post-midterm elections in the country. So in total, there would be a cut of 2 to 2.5 mn bbl per day from November excluding the voluntary cuts that will be most likely done by Saudi.
These are supply cuts that directly impact the physical supply but some factors would impact supply indirectly. One of them will be the stoppage of Russian oil imports to Europe which might include a price cap on it as well. This is expected to come in place by 5th December, though the price cap is yet to be agreed upon and announced.
All these factors will bring a lot of provokes to consuming nations as transportation will also become difficult in the coming months. But the main difficulty will be the price which will have more reasons to go up from here and create further inflation problems. Within this, a decision by a country to ban exports of oil or products will be another pressure and this is already in discussions in the USA.
Such a trend is bringing back the dominance of commodity domination nations that was not witnessed in the past several decades. Thus, it is important to focus on the medium-term horizon rather than the short term.