Oil prices drop as OPEC struggles to reach production agreement

Oil prices fell on Monday as markets reacted to reports that major producers disagree on how much oil to pump in the coming months.

European Brent oil intermittently dropped below 46 dollars per barrel, around 2 dollars lower than on Friday.

The U.S. benchmark crude oil brand West Texas Intermediate briefly fell below 44.50 dollars.

The Organisation of the Petroleum Exporting Countries (OPEC) and a Russia-led group of allied producers, jointly known as OPEC+, are conducting online talks on Monday and Tuesday to discuss whether to prolong the current production curbs.

After the COVID-19 pandemic hurt global energy demand and oil prices earlier this year, OPEC+ decided in April to cut production by 9.7 million barrels per day (bpd), reducing global supply by 10 per cent.

Under the agreed OPEC+ plan, the cut was relaxed by 2 million bpd in August and is scheduled to ease by nearly 2 million bpd more in January.

OPEC heavyweight Saudi Arabia and Russia want to delay the January rise, as many major economies are still grappling with a second COVID-19 wave.

Prices fell on Monday as an alternative plan emerged that would gradually raise oil output instead of delaying the increase by several months.

Oil prices are also under pressure because production in Libya and the United States has been increasing, according to analysts at Commerzbank in Frankfurt.

“Overall, we are pessimistic about oil prices in the short term,’’ they wrote.

Oil ministers from OPEC are set to start talks at 2 p.m (1300 GMT), while the broader OPEC+ group is scheduled to meet online on Tuesday afternoon. (NAN)