VIENNA: Faced with recession fears, more than a dozen major oil producers and their allies are expected to agree to a modest increase in oil production at a meeting on Monday, with some experts even forecasting a cut to support prices.

The 13 members of the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and their 10 partners, led by Russia — better known as OPEC+ — are meeting to adjust their quotas for October. Talks are due to start at 7 p.m. on Monday (Manila time).

This March 3, 2022 file photo shows the logo of the Organization of the Petroleum Exporting Countries outside its headquarters in Austria’s capital Vienna. AP PHOTO
This March 3, 2022 file photo shows the logo of the Organization of the Petroleum Exporting Countries outside its headquarters in Austria’s capital Vienna. AP PHOTO

Far from their highs near $140 a barrel, Brent North Sea crude and West Texas Intermediate crude prices saw their third consecutive monthly decline in August amid a gloomy global economic outlook.

That's enough to fuel speculation.

"It is not entirely clear whether OPEC+ would agree [to] another 100,000 barrels [a] day increase" as in September, Caroline Bain of Capital Economics wrote in a note. "In light of the recent slide in oil prices... we wouldn't rule out no change or even a cut."

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Saudi Energy Minister Abdulaziz bin Salman last month appeared to open the door to the idea, which has since received the support of several member states and the alliance's joint technical committee.

He said "volatility and thin liquidity send erroneous signals to markets at times when clarity is most needed."

OPEC+ is resisting Western calls to open its taps more widely to contain soaring prices.

"The group clearly wants to keep prices high," Oanda analyst Craig Erlam said. "They may fear that Iranian crude could tip the balance in the market in favor of supply and therefore lower prices."

Matthew Holland of Energy Aspects said a cut in production — which would be the first since the drastic cuts made to cope with moribund demand during the coronavirus pandemic — would come up at the next meeting in October.

Everything will depend on the progress of Iranian nuclear negotiations aimed at reviving a landmark agreement between Tehran and world powers that gave the Islamic Republic sanctions relief in exchange for curbs on its nuclear program.

Hopes for a deal, which would be accompanied by an easing of United States sanctions, notably on oil, have been revived recently.

But Washington said last Thursday that Tehran's latest response to a European Union draft was "unfortunately... not constructive."

Amena Bakr, an analyst at Energy Intelligence, warned against overinterpreting the Saudi energy minister's comments, saying only that "volatility is bad for the market."

"It's a message to all Western governments that have been intervening in the market and trying to manage the market" since the start of the war in Ukraine, she said.

In the latest announcement, the Group of Seven — which gathers seven of the world's most industrialized countries — decided last Friday to "urgently" cap the price of Russian oil in order to limit Moscow's earnings from the sale of hydrocarbons.

But Russia has warned it would no longer sell oil to countries that have adopted the unprecedented mechanism.

Supply would then be reduced, contributing to a new surge in prices that, despite the recent decline, remain historically high and extremely volatile.