Publication date:
November 3, 2024
OPEC+ Extends Supply Curbs as Oil Prices Falter
OPEC+ delays planned production increases through December due to weak demand and falling prices.
Fossil Fuels
OPEC+, the oil producer alliance led by Saudi Arabia and Russia, has decided to postpone its planned production increases once again. The group will maintain current supply restraints through December, abandoning earlier intentions to boost output by 180,000 barrels per day starting next month.
This decision comes in response to persistent weakness in global oil demand, particularly in China and Europe, coupled with increasing supplies from non-OPEC producers. Brent crude futures have declined by 17% over the past four months, trading near $73 per barrel - a level that falls short of meeting the fiscal needs of many OPEC+ members.
The move reflects OPEC+'s ongoing struggle to balance the market amid challenging economic conditions. Despite geopolitical tensions in the Middle East, oil prices have remained subdued, with traders increasingly confident that regional conflicts will not significantly disrupt oil shipments.
However, the effectiveness of this latest delay in bolstering prices remains uncertain. The International Energy Agency projects a global oil surplus next year, even if OPEC+ refrains from increasing supplies. Major financial institutions like Citigroup and JPMorgan Chase forecast prices could slip into the $60 range in 2025.
The decision underscores the financial pressures facing key OPEC+ members. Saudi Arabia requires oil prices closer to $100 per barrel to fund its ambitious economic plans, while Russia needs additional revenue to support its military operations in Ukraine.
Despite OPEC+'s efforts, the global oil market faces continued challenges. U.S. oil production reached a record 13.4 million barrels per day in August, while output is also rising in Brazil, Canada, and Guyana. These factors, combined with China's economic slowdown, are creating persistent headwinds for oil prices.
The OPEC+ alliance is scheduled to meet on December 1 to review its policy for 2025. As the group grapples with market oversupply and internal compliance issues, energy traders and analysts will be closely monitoring developments for potential impacts on global oil prices and supply dynamics.
This decision comes in response to persistent weakness in global oil demand, particularly in China and Europe, coupled with increasing supplies from non-OPEC producers. Brent crude futures have declined by 17% over the past four months, trading near $73 per barrel - a level that falls short of meeting the fiscal needs of many OPEC+ members.
The move reflects OPEC+'s ongoing struggle to balance the market amid challenging economic conditions. Despite geopolitical tensions in the Middle East, oil prices have remained subdued, with traders increasingly confident that regional conflicts will not significantly disrupt oil shipments.
However, the effectiveness of this latest delay in bolstering prices remains uncertain. The International Energy Agency projects a global oil surplus next year, even if OPEC+ refrains from increasing supplies. Major financial institutions like Citigroup and JPMorgan Chase forecast prices could slip into the $60 range in 2025.
The decision underscores the financial pressures facing key OPEC+ members. Saudi Arabia requires oil prices closer to $100 per barrel to fund its ambitious economic plans, while Russia needs additional revenue to support its military operations in Ukraine.
Despite OPEC+'s efforts, the global oil market faces continued challenges. U.S. oil production reached a record 13.4 million barrels per day in August, while output is also rising in Brazil, Canada, and Guyana. These factors, combined with China's economic slowdown, are creating persistent headwinds for oil prices.
The OPEC+ alliance is scheduled to meet on December 1 to review its policy for 2025. As the group grapples with market oversupply and internal compliance issues, energy traders and analysts will be closely monitoring developments for potential impacts on global oil prices and supply dynamics.
