OPEC+ has agreement in principle to delay oil output hike

OPEC offices in Vienna.

OPEC+ already has an agreement in principle to postpone planned January production increase, with discussions continuing about the duration of the delay, delegates said.

Ministers from the group will meet online later on Thursday to finalize details of the accord, with the main focus on a delay of three months, delegates said, asking not to be identified because the talks were private.

The group led by Saudi Arabia and Russia has firmed up a deal to once again postpone a sequence of supply increases, which had been due to begin with a hike of 180,000 barrels a day in January. With oil prices currently too low to cover government spending plans, OPEC+ members have been unable to raise output for fear of sending crude even lower.

They have already been forced twice to defer the increases, as faltering demand in China and brimming supply from the Americas weigh on prices. Brent futures have retreated roughly 18% since early July to trade near $73 a barrel.

One OPEC+ member will still be able to begin increasing production in January. The UAE has already won the right to gradually add 300,000 barrels a day in monthly stages next year, regardless of whether the group-wide restraints are delayed further. There’s no indication that this arrangement will change, a delegate said.

Abu Dhabi lobbied hard for the increase, which was granted in recognition of its recent investments in production capacity. Tough negotiations on the matter led to some African members having their capacity figures downgraded — and ultimately the exit of Angola after decades of OPEC membership.

In June, Organization of Petroleum Exporting Countries and its partners had announced a road map for restoring output halted since 2022, adding back a total of 2.2 million barrels a day in monthly tranches over the course of a year. A looming supply glut in 2025 has stymied these plans and prompted criticism from some member countries that the group’s long-term strategy has failed.

An official from Iran — one of OPEC’s founding members — wrote last week that the cartel’s strategy has proved self-defeating as the pursuit of higher oil prices finances an endless tide of rival supply.

On Thursday, Russia’s top oil boss reiterated his longstanding concerns about the group’s policy. Decisions taken by the alliance have boosted US shale producers and reduced the alliance’s share of the global market, Rosneft PJSC Chief Executive Officer Igor Sechin said at the Verona Eurasian Economic Forum in the United Arab Emirates.