As weak demand, particularly from China, and rising supply outside the group continue to push the oil market lower, OPEC+ agreed on November 3 to postpone a planned December increase in oil output by one month.
In December, eight members of OPEC+, which consists of the Organisation of the Petroleum Exporting Countries, Russia, and other allies, were scheduled to increase production as part of a plan to gradually lift the most recent round of output restrictions, which included a 2–2 million barrels per day (bpd) cut.
However, sources told Reuters recently that the group was concerned about adding more supply due to weak demand and economic data, before ministers decided to postpone the hike on Sunday following consultations.
According to a statement from OPEC, the eight nations agreed to prolong the two million barrels per day cut for one month, until the end of December 2024.
Additionally, according to the statement, they “reiterated their collective commitment to achieve full conformity” with output targets. Due in part to the possibility of an additional postponement of the OPEC+ increase, oil prices ended Friday’s trading session just above USD 73 per barrel.
Despite this, Brent crude is still not far from its September low of less than USD 69 this year. Due to a combination of rising supplies, weak demand, and declining prices, OPEC+ had already postponed the increase from October 2024. Prices have also been affected by a reduction in investor anxiety about the Middle East conflict interfering with the region’s oil production.
To balance supply and demand, OPEC and Saudi Arabia have stated time and time again that they base their decisions on market fundamentals rather than aiming for a specific price.
The December increase was scheduled to be 180,000 barrels per day, which is a minor portion of the 586 million barrels per day of output that OPEC+ is reserving, or roughly 5:7% of the world’s demand. To support the market, OPEC+ agreed to make those cuts in phases starting in 2022.