OPEC+ postpones plan to increase oil pumping again

Weak fuel demand and rising supplies have prompted the world's top oil exporters to continue delaying production increases.

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced that it would postpone its plan to increase production until January 2025. The reason is that demand from China - the world's leading oil importer - is weakening and supply from non-OPEC+ countries is increasing, causing oil prices to remain under downward pressure.

OPEC+ had previously planned to increase oil production again from December, at 180,000 barrels per day. Oil ministers also reiterated their commitment to comply with production quotas.

Following the news, world crude oil prices rose nearly 2%. Brent crude traded at $74.5, while WTI rose to $70.9 a barrel. However, Brent prices are far from the bottom set in September, at $69.

A crude oil storage facility of China National Offshore Oil Corporation (CNOOC) in Zhanjiang. Photo: Reuters

OPEC+ had previously postponed plans to raise production in October and November due to falling prices, weak demand and rising supplies. Investors’ easing concerns about conflict in the Middle East also weighed on the market.

So far, OPEC and Saudi Arabia, the cartel’s leader, have maintained that they have no price targets. Their decisions are based on market fundamentals and the goal of balancing supply and demand. However, according to the International Monetary Fund (IMF), Saudi Arabia needs prices around $100 to balance its budget. Crown Prince Mohammed bin Salman is seeking funding for mega-projects to reform the country’s economy.

OPEC+ has been cutting production for the past two years to prevent oversupply in the market, causing prices to fall and causing damage to member countries that depend on oil exports.

Currently, the group is reducing production by 2.2 million barrels per day until the end of December and 1.65 million barrels per day until the end of 2025. Saudi Arabia alone voluntarily reduced an additional 2 million barrels per day from the end of 2022. In total, OPEC+ cut 5.86 million barrels, equivalent to 5.7% of global demand.