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London/Dubai/Moscow— Oil cartel Opec has agreed to delay a planned December oil output increase by one month, the group said on Sunday, as weak demand notably from China and rising supply outside the group maintain downward pressure on the oil market.
Eight members of Opec+, which groups Opec plus Russia and other allies, were due to raise output in December as part of a plan to unwind the group’s most recent layer of output curbs — a cut of 2.2-million barrels per day (bpd).
However, weak demand and economic data raised concern in the group about adding more supply, sources said last week ahead of the decision to postpone the hike, which was made on Sunday after consultations between ministers.
The eight countries decided to extend the 2.2-million bpd cut for a month until the end of December, Opec said in a statement. They also “reiterated their collective commitment to achieve full conformity” with output targets, it said.
Oil prices closed on Friday just above $73 a barrel, supported in part by the prospect of a further delay to the Opec+ increase. Even so, Brent crude is still not far from its lowest levels this year of below $69, reached in September.
Opec+ had already delayed the increase from October because of falling prices, weak demand and rising supplies. An easing of investor concern about conflict in the Middle East disrupting the region’s oil output has also weighed on prices.
Opec and Saudi Arabia have said they do not target a certain price and make decisions based on market fundamentals in the interest of balancing supply and demand.
The December hike was due to be 180,000 bpd, a small part of the total 5.86-million bpd of output Opec+ is holding back, equal to about 5.7% of global demand. Opec+ agreed those cuts in separate steps since 2022 to support the market.
Compliance
Countries’ compliance with agreed output curbs has been in focus, particularly that of Iraq and Kazakhstan, which have been pumping above targets and have promised additional cuts to compensate for the excess.
Opec’s statement said the eight countries took note of recent announcements by Iraq, Russia and Kazakhstan, reaffirming their commitment to the group’s agreement including making the compensation cuts.
Before Sunday’s one-month postponement, the eight members were due to gradually unwind the 2.2-million bpd cut by increasing supply in December 2024 and over the following months into next year.
The remaining Opec+ cuts of 3.66-million bpd will stay in place until the end of 2025, as per an agreement in June 2024.
Opec+ ministers hold a full meeting of the group to decide policy for 2025 on December 1.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Opec agrees to delay December output hike
Weak demand and economic data raise concerns
London/Dubai/Moscow— Oil cartel Opec has agreed to delay a planned December oil output increase by one month, the group said on Sunday, as weak demand notably from China and rising supply outside the group maintain downward pressure on the oil market.
Eight members of Opec+, which groups Opec plus Russia and other allies, were due to raise output in December as part of a plan to unwind the group’s most recent layer of output curbs — a cut of 2.2-million barrels per day (bpd).
However, weak demand and economic data raised concern in the group about adding more supply, sources said last week ahead of the decision to postpone the hike, which was made on Sunday after consultations between ministers.
The eight countries decided to extend the 2.2-million bpd cut for a month until the end of December, Opec said in a statement. They also “reiterated their collective commitment to achieve full conformity” with output targets, it said.
Oil prices closed on Friday just above $73 a barrel, supported in part by the prospect of a further delay to the Opec+ increase. Even so, Brent crude is still not far from its lowest levels this year of below $69, reached in September.
Opec+ had already delayed the increase from October because of falling prices, weak demand and rising supplies. An easing of investor concern about conflict in the Middle East disrupting the region’s oil output has also weighed on prices.
Opec and Saudi Arabia have said they do not target a certain price and make decisions based on market fundamentals in the interest of balancing supply and demand.
The December hike was due to be 180,000 bpd, a small part of the total 5.86-million bpd of output Opec+ is holding back, equal to about 5.7% of global demand. Opec+ agreed those cuts in separate steps since 2022 to support the market.
Compliance
Countries’ compliance with agreed output curbs has been in focus, particularly that of Iraq and Kazakhstan, which have been pumping above targets and have promised additional cuts to compensate for the excess.
Opec’s statement said the eight countries took note of recent announcements by Iraq, Russia and Kazakhstan, reaffirming their commitment to the group’s agreement including making the compensation cuts.
Before Sunday’s one-month postponement, the eight members were due to gradually unwind the 2.2-million bpd cut by increasing supply in December 2024 and over the following months into next year.
The remaining Opec+ cuts of 3.66-million bpd will stay in place until the end of 2025, as per an agreement in June 2024.
Opec+ ministers hold a full meeting of the group to decide policy for 2025 on December 1.
Reuters
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