OPEC+ has announced that it will delay its planned increase in oil output for October and November 2024. This decision comes after a nine-month low in crude prices. The oil producers’ group also mentioned possibly reversing or further postponing the planned output increases.
A weak global economy and soft data from China, the world’s largest oil importer, have caused oil prices to decline along with other asset classes. The October output hikes were planned by eight members of OPEC+, the Organisation of the Petroleum Exporting Countries and its allies led by Russia.
“The eight participating countries have agreed to extend their additional voluntary production cuts of 2.2 million barrels per day for two months until the end of November 2024,” OPEC said, as reported by Reuters.
Brent futures traded above USD 74 before retreating from gains, indicating that the news had increased oil prices by more than USD 1 per barrel. Recently, Brent marked the lowest point of the year.
Due to rising supply outside the group and uncertainty about demand, OPEC+ decided to support the market by raising its October output by 180,000 barrels per day, which is a small portion of the 5.86 million barrels of output it is holding back. This represents roughly 5.7% of global demand.
OPEC+ was scheduled to move forward with the increase. However, the group was concerned about the unstable mood of the oil market due to the possibility of increased supply from OPEC+ and the resolution of the conflict that was preventing Libyan exports, as well as a dimming outlook for demand, according to sources.
On December 1, OPEC+ ministers convene as a full group to decide on policy.
The Joint Ministerial Monitoring Committee, a group of senior OPEC+ ministers with the authority to suggest modifications, meets on October 2.
Recently, oil has been supported by a dispute between rival factions in OPEC producer Libya over control of the central bank, which resulted in a loss of at least 700,000 bpd of production.
However, prices fell by roughly 5% due to reports that a potential agreement to end the conflict was being worked on; however, no agreement to resume exports has been made public.