OPEC+ agrees to delay October oil output hike for two months, sources say
2024.09.05 12:28
By Ahmad Ghaddar, Olesya Astakhova and Alex Lawler
LONDON (Reuters) – OPEC+ has agreed to delay a planned oil output increase for October and November after crude prices hit their lowest in nine months, three sources from the producers’ group told Reuters on Thursday.
Oil prices have been falling along with other asset classes on concerns about a weak global economy and soft data from China, the world’s biggest oil importer. [O/R]
“Two months delay,” one of the sources said. The three sources declined to be identified by name.
The news lifted oil prices by over $1 a barrel, with futures trading at $73.72 a barrel by 1508 GMT. It fell to its lowest this year on Wednesday.
OPEC+’s planned hike was for 180,000 barrels per day (bpd), a fraction of the 5.86 million bpd of output it is holding back, equal to about 5.7% of global demand, to support the market due to uncertainty about demand and rising supply outside the group.
Last week, OPEC+, which is made up of the Organization of the Petroleum Exporting Countries and allies led by Russia, was set to proceed with the increase.
But fragile oil market sentiment over the prospect of more supply from OPEC+ and an end to a dispute halting Libyan exports, coupled with a weakening demand outlook, have raised concern within the group.
OPEC+ ministers hold a full meeting of the group to decide policy on Dec. 1. A group of top OPEC+ ministers called the Joint Ministerial Monitoring Committee that can recommend changes gathers on Oct. 2.
CHINA CONCERN
A dispute between rival factions in OPEC producer Libya over control of the central bank that led to a loss of at least 700,000 bpd of production has supported oil in recent weeks.
Prices, however, slumped by about 5% on Tuesday on news that a possible deal to resolve the conflict was in the works. Weak Chinese demand and a slump in global refining margins which could prompt refiners to process less crude, have also weighed.
RBC Capital analyst Helima Croft said in a note that it may be prudent for OPEC+ to wait until December before returning extra barrels.
The planned October increase was set to come from OPEC+ members who agreed in June to start unwinding the group’s most recent layer of output cuts – a cut of 2.2 million bpd by eight countries – from October 2024 to September 2025.
The remaining cuts of 3.66 million bpd, agreed in earlier steps, will remain in place until the end of 2025.
