OPEC+ delays plan to restore oil production

Brent’s price moved higher after key OPEC+ members agreed to extend the group's ongoing 2.2 million b/d output cut by another month, until the end of this year.

PHOTO: Oil barrels against the OPEC flag. Getty Images

Oil prices gained this morning after eight members of the Saudi Arabia-led coalition decided to delay the 2.2 million b/d supply increase until the year of this year. The members have agreed to restore this output from 1 January 2025. This announcement marks the second delay to OPEC’s supply agreement.

“[Brent] crude oil prices are likely to find some support this week after OPEC announced on Sunday that it is delaying its December production hikes by one month,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

OPEC+ members were set to gradually unwind the additional voluntary supply cuts from 1 December. This news had put some downward pressure on oil prices as market participants predicted a supply surplus.

“While the delay until January does not change fundamentals significantly, it does potentially leave the market having to rethink the strategy of OPEC+,” two analysts from ING Bank said.

Recent reports suggested that Saudi Arabia was “unhappy about giving away market share,” the analysts said. “However, this delayed supply increase means that maybe the group is more willing to support prices than many believe,” they added.

The eight countries that have collectively decided to restore the total 2.2 million b/d of crude oil supply from 1 January include Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman.

By Aparupa Mazumder

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