OPEC and its partners will not deepen their oil production cut yet but will discuss the topic again in December.

This is what Saudi Arabia’s newly appointed Energy Minister Abdulaziz bin Salman told media after this week’s meeting of the Joint Ministerial Monitoring Committee. A discussion, however, may not be enough. OPEC may be forced to decide to cut deeper to prevent a major slump in prices.

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When OPEC agreed to cut 1.2 million bpd from the global market in December last year, benchmark prices reacted without much enthusiasm. In hindsight, this was a harbinger of tough times. Although prices rallied in the beginning of the second quarter of the year with Brent topping $70 a barrel, the rally was brief and correction followed soon enough.

OPEC has been overcomplying with its production quotas. US sanctions against Venezuela and, to a lesser extent Iran, have helped this. And yet, prices have failed to rise again and stay higher. Brent has been hovering around $60 (€54) a barrel and WTI has been rangebound between $50 (€45) and $58 (€53). And now, prices are due to fall even further if demand forecasts from some of the world’s top energy agencies are correct.

Bloomberg’s Julian Lee warned this week even tougher times were ahead for the oil-producing cartel and its partners next year as oil demand slowed down, according to the Energy Information Administration and OPEC itself.

Indeed, in its latest Short-Term Energy Outlook, the EIA forecast global demand for liquid fuels would rise by 900,000 bpd on average for full-2019. That’s down from an earlier forecast of a demand growth rate of 1.3 million bpd.

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The international Energy Agency, for its part, forecast average demand growth this year would be 1.1 million bpd, unchanged from its earlier monthly estimate, and in 2020, it would accelerate to 1.3 million bpd.

OPEC, interestingly, is the most pessimistic about demand. For this year, the group expects this at 1.02 million bpd, with a slight improvement to 1.08 million bpd next year.

Slow demand growth is bad enough when you sacrifice market share growth for higher prices. Yet coupled with rising production from places you cannot control, the news becomes really bad.

Besides the obvious wrench in OPEC’s works, US shale, production growth is imminent in Norway and Brazil as well. In the US, OPEC expects production to grow by 1.8 million bpd this year, which is substantially higher than the EIA’s forecast for domestic production growth, at 1.2 million bpd. The IEA, for its part, sees the US and Norway boosting production by a combined 1 million bpd in the second half of this year, with Brazil adding another 130,000 bpd.

To add insult to injury, more of the additional U.S. oil being pumped in the shale patch is going to reach international markets as some 2 million bpd of new pipeline capacity enters into operation.

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Against this backdrop, OPEC’s limited options become clear. The cartel has two choices, and nobody is talking about the second one: a repeat of the pump-them-to-death approach that brought on the 2014 price collapse. The reason nobody is talking about it is that OPEC members lack sufficient financial buffers to withstand another price collapse unscathed. This leaves them with one choice: cut production more.

Yet there is a problem with this, too. Russia has repeatedly signaled it is not too fond of more cuts. Moscow has been consistent in its general support for supply controls but reluctant to comply fully with these controls not least because it can do just fine with lower oil. The Russian central bank recently said it had stipulated a price of $25 per barrel of crude in a risk scenario for next year. That’s some pretty nutritious food for thought for Russia’s partners in the cuts.

This article was originally published on Oilprice.com