OPEC+ agreed to push back its December production increase by one month, the second delay to its plans to revive supply as prices continue to struggle amid a fragile economic outlook.
The group led by Saudi Arabia and Russia had intended to begin a series of monthly production increases by adding 180,000 barrels a day from December, but they will now keep supply restrained through that month, according to a statement posted on OPEC’s website on Sunday.
They had already pushed back the move from October as faltering demand in China and swelling supplies from the Americas pressure prices. Brent futures have slumped 17% in the past four months to trade near $73 a barrel, too low for the Saudis and many others in OPEC+ to cover government spending.
Further delay may do little to bolster the market, having been anticipated by many traders. Global markets still face a glut next year even if the OPEC+ alliance refrains from increasing supplies, the International Energy Agency in Paris estimates. Citigroup Inc. and JPMorgan Chase & Co. see prices slipping into the $60s in 2025.
Crude markets have largely shrugged off a year of conflict in the Middle East, including Israel’s recent retaliatory strike against Iran, as traders grow increasingly confident that oil shipments from the region will remain unaffected.
That poses a financial threat for Riyadh, which needs levels closer to $100 a barrel to cover the ambitious economic plans of Crown Prince Mohammed bin Salman, according to the International Monetary Fund. The kingdom’s oil-market partner, Russian President Vladimir Putin, also needs fund for his war against Ukraine.
In June, the Organization of Petroleum Exporting Countries and its partners outlined a road map to gradually restore in monthly tranches 2.2 million barrels a day of output halted over the past two years.
Yet deteriorating fundamentals have thwarted their plans, with demand in China suffering a four-month contraction and supplies climbing in the US, Brazil, Canada and Guyana.
OPEC+ has also struggled to get some members — notably Russia, Iraq and Kazakhstan — to implement their share of agreed supply cutbacks. The trio have promised to comply better, and make additional curbs to compensate for overproduction, but have generally been pumping in excess of their quotas.
The 23-nation alliance is set to gather on Dec. 1 to review policy for 2025.
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