Chinese Business

The OPEC+ group of oil exporters meets Wednesday to discuss another output increase, weeks after US President Joe Biden sought to persuade Saudi Arabia to boost production during a controversial visit to the country.

The White House has been pressing the oil cartel to step up production to tame prices that have surged since Russia invaded Ukraine in late February.

But the group, which is led by Saudi Arabia and Russia, has stuck to modest increases so far.

The 13-member Organization of the Petroleum Exporting Countries, along with 10 allies that include Russia, had slashed production at the height of the Covid pandemic in 2020 after a plunge in demand caused prices to sink.

The group began to raise production last year, agreeing to add 400,000 barrels per day to the market. It backed an increase of nearly 650,000 barrels per day in June, still not enough to spark a big drop in oil prices.

The alliance’s output is back to pre-virus levels, but just on paper as a few members have struggled to meet their quotas.

All eyes will be on whether OPEC+ sticks to the same output policy or steps it up.

– Biden’s Saudi voyage –

Biden travelled to Saudi Arabia in mid-July to meet Crown Prince Mohammed bin Salman despite his promise to make the kingdom a “pariah” in the wake of the 2018 killing of journalist Jamal Khashoggi.

Part of the reason for the controversial trip was to convince Riyadh to continue loosening the production taps to stabilise the market and curb rampant inflation.

After his meetings with Saudi leaders in mid-July, Biden said he was “doing all I can” to increase the oil supply but added that concrete results would not be seen “for another couple weeks” — and it was unclear what those might be. 

Wednesday’s meeting will reveal whether his efforts were successful.

“The US administration appears to be anticipating some good news but it’s hard to know whether that’s based on assurances during Biden’s trip or not,” Craig Erlam, analyst at OANDA trading platform, told AFP.

Stephen Innes, managing partner at SPI Asset Management, said it “wouldn’t be a surprise to see the Saudis announce something that Biden could tout as a win to voters at home.”

– Sceptical market –

According to the London-based research institute Energy Aspects, OPEC+ could adjust its current agreement in order to keep raising crude production volumes.

However, analysts warn against expecting any drastic increases.

OPEC+ has to take into account the fact that the interests of Russia — a key player in the alliance — are diametrically opposed to those of Washington.

“Saudi Arabia has to walk a fine line,” said Tamas Varga, analyst at PVM Energy. 

Any decision on Wednesday will have to be unanimous, which may lead to a longer meeting than normal.

“Any new OPEC+ deal aimed at further ramping up supplies is likely to be met with market scepticism, considering the supply constraints already evident within the alliance,” said Han Tan, chief market analyst at Exinity. 

The group will decide output policy under a new secretary general, Kuwait’s Haitham Al-Ghais, who took office on Monday following the death of Nigeria’s Mohammed Barkindo last month.

“I look forward to working with all our Member Countries and our many partners around the world to ensure a sustainable and inclusive energy future which leaves no one behind,” Al-Ghais said in a statement.

Stock markets wobbled on Monday as investors track a raft of corporate earnings reports while oil prices sank over concerns about Chinese demand.

London’s FTSE 100, the Paris CAC 40 and Frankfurt DAX were flat in afternoon trading after drifting higher earlier in the day.

Wall Street opened lower on the first day of August following a strong month in July.

Asian stock markets finished higher despite another disappointing reading on the health of the Chinese economy.

The closely watched Purchasing Managers’ Index of manufacturing activity shrank in July on the back of weak demand and the strict zero-Covid measures imposed in parts of the country.

While sweeping curbs have eased in major hubs such as Shanghai and Beijing, sporadic lockdowns in other cities and towns have kept businesses and consumers worried with few signs of the policy easing.

The China data sent oil prices sharply lower, with the international benchmark, Brent, slipping just under $100 per barrel while the main US contract, WTI, fell by five percent to around $94.

“Oil prices were under pressure after weak Chinese manufacturing figures which really show the continuing impact of lockdowns on the country’s economy,” said AJ Bell investment director Russ Mould.

“China remains one of the biggest consumers of oil and other commodities.” Mould said.

Traders are also waiting for another output decision by the OPEC+ group of major crude-producing nations on Wednesday.

– ‘Bullish’ HSBC –

In corporate news, Asia-focused lender HSBC provided another boost with a “bullish” outlook, alongside its intention to revert to quarterly shareholder dividends next year.

HSBC shares jumped by seven percent percent in the British capital. 

Other major corporate earnings reports this week include those from oil giant BP, US ride-hailing firm Uber, Japanese automaker Toyota and Chinese tech giant Alibaba.

Last week, strong earnings from US titans Amazon and Apple sparked healthy Wall Street gains and eased concerns about the economic impact of surging inflation and rising rates.

That came after investors took Federal Reserve chief Jerome Powell’s comments Wednesday to indicate the US central bank could start slowing down its monetary tightening, providing a much-needed boost to stocks.

The Bank of England is expected to deliver a bumper 0.5-percentage-point interest rate hike this Thursday to combat rocketing inflation.

“Sharp hikes by the US Federal Reserve and European Central Bank in July make it all the more likely that it will pull the trigger on an outsize rate hike,” Markets.com analyst Neil Wilson told AFP.

Global central banks are ramping up borrowing costs in an attempt to get a handle on runaway consumer price inflation.

– Key figures at around 1340 GMT –

London – FTSE 100: FLAT at 7,422.33 points

Frankfurt – DAX: FLAT at 13,491.18

Paris – CAC 40: FLAT at 6,446.18

EURO STOXX 50: DOWN 0.1 percent at 3,703.75

New York – Dow: DOWN 0.4 percent at 32,723.31

Tokyo – Nikkei 225: UP 0.7 percent at 27,993.35 (close)

Hong Kong – Hang Seng Index: UP 0.1 percent at 20,165.84 (close)

Shanghai – Composite: UP 0.2 percent at 3,259.96 (close)

Euro/dollar: UP at $1.0255 from $1.0228 Friday

Pound/dollar: UP at $1.2260 from $1.2189 

Euro/pound: DOWN at 83.64 pence from 83.89 pence

Dollar/yen: DOWN at 131.93 yen from 133.25 yen

Brent North Sea crude: DOWN 3.9 percent at $99.94 per barrel

West Texas Intermediate: DOWN 5.0 percent at $93.64 per barrel

burs/lth/raz

European equities drifted higher Monday after Asian gains, as investors tracked the latest corporate and geopolitical news.

Markets brushed off weak Chinese data and comments indicating the Federal Reserve is wedded to its anti-inflation rate-hike campaign.

Investors in Europe were “happy to drift higher”, Markets.com analyst Neil Wilson told AFP.

He added that sentiment was partly “lifted” by news that the first shipment of Ukrainian grain since the Russian invasion had left the port of Odessa.

Asia-focused lender HSBC provided another boost with a “bullish” outlook, alongside its intention to revert to quarterly shareholder dividends next year.

HSBC shares jumped 7.1 percent to 550.30 pence in the British capital.

London stocks also rose despite expectations that the Bank of England would deliver a bumper 0.50-percentage-point interest rate hike this Thursday to combat rocketing inflation.

“Sharp hikes by the US Federal Reserve and European Central Bank in July make it all the more likely that it will pull the trigger on an outsize rate hike,” Wilson noted.

Global central banks are ramping up borrowing costs in an attempt to get a handle on runaway consumer price inflation.

– Weak China data –

Asian stock markets climbed, regardless of another disappointing reading on the health of the Chinese economy.

The closely watched Purchasing Managers’ Index of manufacturing activity shrank in July on the back of weak demand and the strict zero-Covid measures imposed in parts of the country.

While sweeping curbs have eased in major hubs such as Shanghai and Beijing, sporadic lockdowns in other cities and towns have kept businesses and consumers worried with few signs of the policy easing.

The China data sent oil prices sharply lower on revived demand concerns ahead of Wednesday’s OPEC scheduled output meeting.

Last week, strong earnings from US titans Amazon and Apple sparked healthy Wall Street gains and eased concerns about the economic impact of surging inflation and rising rates.

That came after investors took Fed chief Jerome Powell’s comments Wednesday to indicate the US central bank could start slowing down its monetary tightening, providing a much-needed boost to stocks.

– Key figures at around 1145 GMT –

London – FTSE 100: UP 0.5 percent at 7,463.86 points

Frankfurt – DAX: UP 0.6 percent at 13,559.63

Paris – CAC 40: UP 0.4 at 6,475.42

EURO STOXX 50: UP 0.5 percent at 3,726.74

Tokyo – Nikkei 225: UP 0.7 percent at 27,993.35 (close)

Hong Kong – Hang Seng Index: UP 0.1 percent at 20,165.84 (close)

Shanghai – Composite: UP 0.2 percent at 3,259.96 (close)

New York – Dow: UP 1.0 percent at 32,845.13 (close)

Euro/dollar: UP at $1.0251 from $1.0228 Friday

Pound/dollar: UP at $1.2240 from $1.2189 

Euro/pound: DOWN at 83.76 pence from 83.89 pence

Dollar/yen: DOWN at 132.25 yen from 133.25 yen

Brent North Sea crude: DOWN 1.3 percent at $102.63 per barrel

West Texas Intermediate: DOWN 2.0 percent at $96.62 per barrel

burs/rfj/raz

HSBC bank on Monday said pre-tax profit fell in the first half, and appeared to rebuff calls to spin off its Asian activities on the eve of a key shareholder meeting.

Pre-tax earnings sank 15 percent to US$9.2 billion after it took a $1.1-billion hit on possible credit losses “to reflect heightened economic uncertainty and inflation”, HSBC said.

The result “reflected a more normalised level of expected credit losses compared with the Covid-19 releases made last year, as well as the macroeconomic impact of the Russia-Ukraine war”, added Chief Executive Noel Quinn.

However, net profit rose 14 percent to US$8.3 billion in the reporting period partly on a large one-off tax credit.

– Quarterly dividends –

The annual revenue outlook was positive, Quinn noted, with net interest income expected to reach at least US$31 billion this year and US$37 billion next year as interest rates rise.

The group was confident of achieving its best returns in a decade in 2023.  

“We also intend to revert to quarterly dividends in 2023,” he added.

London-headquartered HSBC was among a number of major banks to cancel dividends early in the pandemic after a de facto order from the Bank of England — a move that upset some Hong Kong investors.

Monday’s results come one day before HSBC executives’ first face-to-face meeting with shareholders from the Asian financial hub in three years.

– Asia spin-off demands –

Executives are expected to field questions about a restructuring bid from its biggest shareholder Ping An Insurance Group.

The lender is under pressure from Ping An, which has a 9.2-percent stake, to spin off its Asian operations, in a bid to unlock shareholder value amid tensions between China and the West.

The bank has previously hinted it wants to keep its current structure while continuing a pivot to Asia.

Quinn, speaking later on Monday, suggested such an “alternative structure” would have a “negative” impact on HSBC.

“It has been our judgment that alternative structural options will not deliver increased value for shareholders,” Quinn told analysts on a conference call.

“Rather, they would have a material negative impact on value.”

HSBC had “considered many of these options over recent years”, and recently updated its analysis with third-party financial and legal advice, he added.

Hong Kong politician Christine Fong said on Sunday that HSBC separating its Asian business and bringing back its primary listing to the city is the “best way to protect (the interests of) minority shareholders”.

Fong, who reportedly represents 500 small investors in HSBC stock, also voiced support for Ping An getting seats on HSBC’s board, citing the cancelled dividends in 2020 as a reason.

Last year, HSBC vowed to accelerate a multi-year pivot to Asia and the Middle East, with ambitions to lead Asia’s wealth management market.

The bank said it would invest $6 billion in Hong Kong, China and Singapore and hire more than 5,000 wealth advisers — while slashing 35,000 jobs and cutting its retail operations in the United States and France. 

Hong Kong has tipped back into a technical recession, new government figures showed Monday, weighed down by mounting interest rates, weakened global trade and the city’s continued adherence to strict coronavirus controls.

Following a year-on-year decrease of 3.9 percent in the first quarter of 2022, the city’s GDP again reported decline in the second quarter on Monday — but with a narrower margin of 1.4 percent — according to advance estimates released by the Census and Statistics Department. 

The downturn is reversing last year’s recovery when the economy enjoyed a 6.3 percent annual growth after the slowdown in 2019 and 2020, when the city was first upended by months of huge, sometimes violent pro-democracy protests, and then the pandemic.

The Hong Kong government said the economic improvement was smaller than expected due to weak performance in external trade.

Official statistics released last month showed the value of total exports of goods in the second quarter decreased by 4.2 percent compared with the preceding quarter. 

For the first half of 2022, a visible trade deficit of $206.1 billion, equivalent to 8.2 percent of the value of imports of goods, was recorded.

“Weakened global demand and continued disruptions to cross-boundary land cargo flows between the mainland and Hong Kong weighed heavily on Hong Kong’s exports,” the government said Monday.

Monetary policy tightening by major central banks around the world is expected to dampen global economic growth significantly while quarantine-free travel between Hong Kong and mainland China is yet to have a clear timetable under Beijing’s strict adherence to its zero covid policy.

The financial hub’s new leader John Lee said his government would soon announce further shortening of mandatory hotel quarantine for overseas arrivals, according to an interview with the Hong Kong Economic Journal published on Monday.  

“Connecting with the world and with the mainland, we shall do both and they are not contradictory,” Lee told the newspaper. 

“I understand that one of Hong Kong’s competitiveness lies in its international connections.” 

In following China’s zero covid policy, Hong Kong has been largely cut off from the rest of the world for more than two years. 

It still has some of the world’s strictest restrictions, including week-long quarantine for arrivals and a ban on group gatherings with more than four people.

Local media recently reported that the government was mulling resuming quarantine-free travel for overseas arrivals in November, when the city is hoping to resuscitate its international image with a finance summit and the Hong Kong Rugby Sevens. 

Families embraced and cried tears of joy Monday as they reunited at Tonga’s airport — the inaugural arrivals to the Pacific nation after it lifted Covid restrictions for the first time since the pandemic struck.

After Tonga shut its borders in March 2020, the government had tightly controlled a select list of people who were approved to fly into the kingdom — leaving over 3,000 Tongans stuck overseas.

But with restrictions lifted, Monday’s first batch of tourists and returning Tongans — greeted with colourful garlands and serenaded by a band at the Fua’amotu International Airport — will not have to undergo quarantine. 

The first plane to land was an Air New Zealand flight from Auckland carrying around 200 passengers.

“It’s good to be back,” said ‘Etu Palu, eager to see family again with his mother Finau Palu, who said it was “good to visit the motherland!”

Another passenger, Siosaia Filikitonga, said this was his first visit to Tonga in more than two years because of the pandemic.

“I am happy and emotional. Once Tonga announced the border re-opening, I booked to come,” Filikitonga told AFP.

Amid the reunions, Sione Moala Mafi, CEO of Tonga’s Ministry of Tourism, said the visitors bring an important boost to the Pacific Kingdom’s economy.

“I’m so glad that the border’s open and that facilitates the travel between Tonga and the outside world, especially, New Zealand,” he said.

“I can see there are a lot of foreign visitors are arriving on the flight as well as Tongans.”

More flights, one from New Zealand and one from Australia, are expected later this week with planes from Fiji also due Tuesday and Saturday.

“We are happy to welcome them,” Moala Mafi added.

– No super yachts –

Despite its reopening, Tonga is taking a cautious staged approach by limiting the number of incoming flights this month under a framework announced by the Prime Minister’s Office on July 22.

They will review the number of flights and cruise ships for September and October, and all incoming passengers must be vaccinated and have negative COVID-19 tests before departure and three to five days after arrival.

Currently the government’s National Emergency Management Committee has set the current level to “orange”, but Moala Mafi said it looks like “we are progressing towards” going “green”.

“Orange now and it has to be reviewed at the end of this month,” he said.

So far, yachts and super yachts are not included in the border re-opening, much to the frustration of tourism operators, who say July, with its fantastic weather, is the peak season in Tonga.

“I’ve got 20 boats sitting in Tahiti that want to come to Tonga. Big boats, I’m not talking about little yachts, because they won’t let the yachts come back in here and I don’t know why,” said David Hunt, owner of Super Yacht Services Tonga.

He was waiting at the airport to meet a yacht owner who had not seen his yacht moored in Vava’u —  one of Tonga’s islands — for over three years.

“Before the pandemic, we were averaging about 30 to 35 yachts a year between operators, but it could be much more this year,” he said.

“They’ve got all these boats coming down to the Pacific they don’t want to be in Ukraine, in the Mediterranean.”

Moala Mafi said the government is still undecided on yachts in Tongan waters.

“We are still finalising the policy framework for the cruise ships,” he said. “We don’t forget them, but they are in the pipeline.”

Japan’s biggest airline ANA on Monday posted a quarterly net profit for the first time in two and a half years as the sector recovers from the financial pain of the pandemic.

The relaxation of Covid-19 measures in Japan and various other countries increased demand for domestic and international travel, ANA said, with a cheaper yen also providing a boost.

In April-June, the company logged a net profit of one billion yen ($7.6 million), following nine consecutive quarters of losses beginning in January-March 2020, when the virus started to cause havoc worldwide.

However, it was still only around a tenth of the airline’s net profit in April-June 2019, when Japanese tourism was booming.

Although fuel prices and other expenses were higher, “disciplined cost management” and efforts to rein in fixed costs led to a “significant improvement” in profitability, ANA said.

Revenue for the first quarter was up 76 percent on-year at 350 billion yen, but the airline still suffered an operating loss and maintained its annual net profit forecast of 21 billion yen.

Rival Japan Airlines on Monday logged a net loss of 19.56 billion yen for April-June, but echoed ANA in saying demand for flights was recovering as pandemic restrictions eased.

“There still exists various uncertain external environments including the Russia-Ukraine situation or price hike of raw materials including fuel,” JAL warned.

The carrier kept its full-year net profit estimate at 45 billion yen, unchanged from the previous quarter.

Asian markets mostly rose Monday and oil fell as investors brushed off both weak data from China and comments indicating the Federal Reserve is wedded to its anti-inflation rate hike campaign.

Strong earnings from Wall Street titans Amazon and Apple had helped US markets end last week with healthy gains and eased concerns about the impact on consumers of surging inflation and rising borrowing costs.

That came after investors took Fed chief Jerome Powell’s comments Wednesday after a policy meeting to indicate the central bank could start slowing down monetary tightening, providing a much-needed boost to stocks.

However, analysts warned that inflation would take time to come down from its four-decade highs and that there were undoubtedly more rate hikes to come.

Officials backed that up at the weekend, with Minneapolis Fed chief Neel Kashkari telling The New York Times that he was “surprised by markets’ interpretation” of the latest Fed meeting statement.

“I think we’re going to continue to do what we need to do until we are convinced that inflation is well on its way back down to two percent,” he said. “We are a long way away from that.”

And Atlanta Fed president Raphael Bostic said he did not think the economy was in recession owing to ongoing jobs growth but that inflation remained too high and he was “convinced” more must be done.

Still, Treasuries continued to fall, with the 10-year yield at 2.67 percent, well down from June’s peak near 3.50 percent, suggesting expectations for future rates are easing.

Inflation pressure could get some relief following news that the first shipment of Ukrainian grain left the port of Odessa on Monday under a deal aimed at relieving a global food crisis following the Russian invasion.

– Weak China data –

Asian markets opened the day cautiously as investors struggled to extend Wall Street’s lead, but they picked up in the afternoon.

Hong Kong and Shanghai recovered after sinking in reaction to another disappointing reading on the Chinese economy.

The closely watched Purchasing Managers’ Index of manufacturing activity shrank in July on the back of weak demand and the strict zero-Covid measures imposed in parts of the country.

While sweeping curbs have eased in major hubs such as Shanghai and Beijing, sporadic lockdowns in other cities and towns have kept businesses and consumers worried with few signs of the policy easing.

OANDA’s Craig Erlam said there was a positive to be taken from “the improvement in supply chain conditions, which should aid the inflation fight around the world”.

“Of course, it is more than just a supply chain problem at this point but every little helps.”

Hong Kong tech was weighed, however, by the news that US authorities had put market heavyweight Alibaba on a list of firms threatened with a New York delisting if they did not comply with disclosure rules.

Tokyo, Sydney, Seoul, Mumbai, Singapore, Bangkok, Jakarta and Wellington edged up, though Taipei and Manila edged slightly lower.

London opened slightly higher but Paris and Frankfurt dipped.

The data out of China revived demand concerns on oil markets, sending both main contracts down Monday, following a bounce last week.

Investors are now eyeing a meeting of OPEC and other major producers this week where they will discuss their deal to raise output slowly.

US President Joe Biden had called on Saudi Arabia to open the taps further when he visited last month as he tried to address a crucial driver of inflation around the world.

But the kingdom does not appear to have made any such moves so far, with oil having lost almost all the gains made since Russia’s Ukraine invasion.

“The US has expressed optimism about the potential for an OPEC+ supply response,” said SPI Asset Management’s Stephen Innes.

“However, it seems highly unlikely there will be much appetite for a significant increase in production.”

– Key figures at around 0810 GMT –

Tokyo – Nikkei 225: UP 0.7 percent at 27,993.35 (close)

Hong Kong – Hang Seng Index: UP 0.1 percent at 20,165.84 (close)

Shanghai – Composite: UP 0.2 percent at 3,259.96 (close)

London – FTSE 100: UP 0.3 percent at 7,448.17

Euro/dollar: UP at $1.0232 from $1.0228 Friday

Pound/dollar: UP at $1.2202 from $1.2189 

Euro/pound: DOWN at 83.85 pence from 83.89 pence

Dollar/yen: DOWN at 132.60 yen from 133.25 yen

West Texas Intermediate: DOWN 1.1 percent at $97.55 per barrel

Brent North Sea crude: DOWN 0.4 percent at $103.52 per barrel

New York – Dow: UP 1.0 percent at 32,845.13 (close)

Macau was set to remove most coronavirus restrictions on Tuesday after the casino hub’s gaming revenue hit its lowest level on record.

The former Portuguese colony is the only territory in China where casinos are allowed, and its multi-billion-dollar gaming industry was until recently bigger than Las Vegas.

But the sector has taken a kicking in recent years, not only from the coronavirus pandemic but also from a Beijing-directed anti-corruption crackdown.

Gross gaming revenue fell to 398 million patacas (US$49 million) in July, the lowest since records began in 2009, according to the city’s Gaming Inspection and Coordination Bureau.

It was slightly better than analyst expectations, according to Bloomberg, but was still down 98 percent from pre-pandemic levels.

Macau’s casinos were ordered to shut down for 10 days in July as the city was placed under three weeks of “static management” modelled after the Covid-19 lockdowns in mainland China.

Public services and commercial activities were suspended, and residents were not allowed to leave home except to take a mandatory Covid test or to buy essentials.

Most restrictions will be removed on Tuesday,  with the city having recorded no new infection for nine days, the government announced on Monday.

Official departments will resume full operations, as will commercial activities — on the condition that customers present a negative Covid test from the previous 72 hours.

Though the casinos reopened more than a week ahead of other businesses, getting out of the slump will depend on Macau resuming quarantine-free travel from mainland China — its largest source of revenue.

Under China’s strict zero-Covid policy, Macau will have to stay nearly infection-free to reopen its border.

“You are stuck in this zero-Covid situation where it’s unclear when the government’s actually going to do anything about it,” Sanford C. Bernstein analyst Vitaly Umansky told Bloomberg.

“The reality is right now there’s nobody in Macau.”

The city recently started the bidding process for six gaming licences after a legal reform to slash concession periods from 20 years to 10, and to boost local ownership and government supervision.

The OPEC+ group of oil exporters are set to hammer out a new strategy at their meeting Wednesday, with all eyes on how they will react to soaring crude prices.

The 13 core members of OPEC, led by Saudi Arabia, and the 10 further states in OPEC+ — chief among them Russia — find themselves at a crossroads.

After the drastic output cuts they agreed to in spring 2020 in reaction to the plunge in demand caused by the coronavirus pandemic, the member states of the alliance are once again producing at pre-virus levels — at least on paper.

In normal times they would perhaps have stopped at that but faced with runaway prices and pressure from Washington, this scenario is viewed as unlikely.

– Biden’s controversial voyage –

US President Joe Biden travelled to Saudi Arabia in mid-July despite his promise to make the country a “pariah” in the wake of the 2018 killing of journalist Jamal Khashoggi.

Part of the reason for the controversial trip was to convince Riyadh to continue loosening the production taps to stabilise the market and curb rampant inflation.

Wednesday’s meeting will reveal whether his efforts were successful.

“The US administration appears to be anticipating some good news but it’s hard to know whether that’s based on assurances during Biden’s trip or not,” Craig Erlam, analyst at Oanda, told AFP.

“It wouldn’t be a surprise to see the Saudis announce something that Biden could tout as a win to voters at home,” according to Stephen Innes of SPI Asset Management.

– Sceptical market –

According to the London-based research institute Energy Aspects, OPEC+ could adjust its current agreement in order to keep raising crude production volumes.

However, analysts warn against expecting any drastic increases.

OPEC+ has to take into account the fact that the interests of Russia — a key player in the alliance — are diametrically opposed to those of Washington.

“Saudi Arabia has to walk a fine line,” says Tamas Varga, analyst at PVM Energy. 

The task will be to allow the United States to save face while also placating Moscow in order to ensure the stability of the alliance.

Any decision on Wednesday will have to be unanimous, which may lead to a longer meeting than normal.

The videoconference meeting is due to start at around 1300 GMT on Wednesday (or 3 pm at the cartel’s Vienna headquarters).

“Any new OPEC+ deal aimed at further ramping up supplies is likely to be met with market scepticism, considering the supply constraints already evident within the alliance,” says Han Tan at Exinity. 

The alliance already regularly fails to fill the production quotas already allotted and has struggled to get back to pre-pandemic volumes.