OPEC+ is contemplating a further delay to a planned increase in oil output originally scheduled for January, according to sources within the producer group. This decision comes ahead of an online meeting set for Sunday, where OPEC+ will discuss its policy for the early months of 2025.
Key Highlights:
Current Discussions: OPEC+ members, including Iraq, Saudi Arabia, and Russia, recently held talks in Baghdad regarding the state of global oil markets. The group, which accounts for approximately 50% of the world’s oil supply, had intended to gradually reduce production cuts with modest increases throughout 2024 and 2025.
Market Conditions: A slowdown in demand from China and other global markets, coupled with rising output from non-OPEC+ producers, has led to reconsideration of the planned output hike. Azerbaijan’s Energy Minister, Parviz Shahbazov, indicated that the current output cuts may remain in effect starting January 1.
Analyst Predictions: Analysts from Commerzbank suggest that the output increase could be postponed until at least the end of the first quarter of 2025, reflecting cautious sentiment in the market.
Oil Price Stability: Despite the ongoing cuts and potential delays, oil prices have remained relatively stable, fluctuating between $70 and $80 per barrel this year. As of Tuesday, prices were trading below $74 per barrel, close to a low reached in September.
Commitment to Agreements: The meeting in Baghdad highlighted the importance of adhering to the OPEC+ supply agreement, which includes voluntary production cuts by eight member states. Iraqi Prime Minister Mohammed Shia al-Sudani, Saudi Energy Minister Prince Abdulaziz bin Salman, and Russian Deputy Prime Minister Alexander Novak emphasized the need for compliance to maintain market stability.
Previous Decisions: In its last meeting on November 3, OPEC+ agreed to delay a planned increase in output from December to the end of the month. This increase is expected to be 180,000 barrels per day (bpd), a minor portion of the 5.86 million bpd that OPEC+ has been withholding to support market prices.