Japanese trade body expects Opec+ to extend supply cuts

Pexels/Jan-Rune Smenes Reite

The head of Japan’s oil industry body said on Monday he expects Opec+ to extend its supply curbs after December to support oil prices.

Opec+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, is set to consider whether to make additional oil supply cuts when it meets on November 26, three Opec+ sources told Reuters after crude prices dropped by almost 20 percent since late September.

“At least, the current production curbs will probably continue,” including additional voluntary curbs from Saudi Arabia and Russia, Shunichi Kito, president of the Petroleum Association of Japan (PAJ), told a news conference, noting that Saudi Arabia wants to keep oil prices above $80 a barrel.

“We don’t know if there will be deeper production cuts,” he said.

Saudi, Russia and other members of Opec+ have already pledged total oil output cuts of 5.16 million barrels per day, or about five percent of daily global demand, in a series of steps that started in late 2022. The cuts include 3.66 million bpd by Opec+ and additional voluntary cuts by Saudi Arabia and Russia.

The PAJ expects Dubai oil prices to stay in the range of $80-$95 a barrel for the next month, said Kito, also the president of oil refiner Idemitsu Kosan.

Asked about the seizure of a ship by Yemen’s Houthis in the Red Sea, Kito said it would have no direct impact on oil supply to Japan which depends on the Middle East for 95 percent of its crude oil imports.

Japanese refiners will continue to work with tanker operators to ensure safe voyages of oil carriers, but the PAJ has no immediate plans to ask for extra help from the country’s self-defence forces, Kito said.

In 2020, Tokyo sent forces to the Middle East to help ensure the safety of merchant ships following several attacks on international merchant vessels and Japanese forces are still present in the Gulf of Oman, the northern Arabian Sea and the Gulf of Aden.