OPEC+ to delay supply increase by three months, Bloomberg reports
2024.12.05 08:52
Investing.com — OPEC+ has decided to delay the restart of its oil production increases by three months, Bloomberg reported Thursday, citing delegate sources. This represents the third postponement as crude prices remain under pressure amid expectations of a surplus.
The alliance, led by Saudi Arabia and Russia, has postponed the planned supply increases, which were initially scheduled to begin with a 180,000 barrels per day hike in January. Instead, the increases will start in April and be implemented at a slower pace than previously outlined, the report said.
The United Arab Emirates (UAE) will also hold off on production increases until April, per the report. The UAE had previously secured the right to boost output by 300,000 barrels per day in gradual monthly increments starting January, reflecting its recent investments in production capacity.
OPEC+ first announced in June that it would gradually restore 2.2 million barrels per day of output in monthly stages after cuts initiated in 2022. However, the group’s plans have faced setbacks due to faltering oil demand in China, the world’s largest consumer, and surging supply from the United States, Brazil, and Canada.
The International Energy Agency (IEA) estimates that global oil markets could face a surplus in 2025 even if OPEC+ refrains from adding any additional barrels.
Reflecting the challenges facing OPEC+, the latest agreement means the group will not fully unwind its voluntary production cuts until September 2026, a year later than initially planned.
Oil prices have fallen roughly 18% since early July, as traders shift their focus from Middle East tensions to China’s economic slowdown and associated challenges.
The decision to pause supply increases also allows OPEC+ to gauge the potential impact of President-elect Donald Trump’s return to the White House.
Trump has indicated he may revive the “maximum pressure” strategy on Iran’s oil exports, a policy from his first term aimed at restricting Tehran’s nuclear ambitions. Reducing Iran’s oil sales could create openings for its regional rivals to fill.
