OPEC typically formulates its production policy in response to recent events. But oil industry observers believe the organization may venture into new territory later this year by making a preemptive reduction in output quotas.
“It would break the mold,” commented Derek Brower, a director at the consultancy RS Energy Group. “OPEC makes policy reactively, not proactively.”
This would be an unusual move, but it would occur under unusual circumstances. OPEC has already slashed production quotas once this year in response to ample supplies and sluggish demand, but its actions have not done as much as expected to push oil prices above the threshold of $60 barrel.
Meanwhile, market conditions are set to grow worse next year, since production is likely to continue rising in key areas such as the U.S. shale patch. As a result, influential analysts from institutions such as Commerzbank and Morgan Stanley are calling for further cuts before a supply glut emerges.