London (Business Emerge), September 6: OPEC+, the coalition of oil-producing countries led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, has decided to delay its previously scheduled oil output increase. Originally planned for October, the production hike has now been postponed for two months until the end of November 2024, according to a statement released on Thursday. This move comes in response to declining oil prices, which recently hit their lowest point in nine months, and ongoing concerns about weak global demand.
A recent virtual meeting involving eight OPEC+ members confirmed that the additional voluntary production cuts amounting to 2.2 million barrels per day (bpd) will be extended. This decision aims to stabilize the market amidst uncertainty over oil demand, especially due to soft economic data from China, the world’s largest oil importer. The group also hinted that it might further adjust its plans, including the possibility of reversing the output hike if necessary.
Brent crude prices reacted positively to the announcement, increasing by over $1 per barrel, temporarily exceeding $74 before settling back. Prior to the meeting, oil prices had been on a steep decline, with Wednesday marking the lowest point this year. The postponed increase initially targeted an output hike of 180,000 bpd, a relatively small portion of the 5.86 million bpd that OPEC+ is withholding from the market to counterbalance the effects of rising global supply and uncertainties in demand.
Market sentiment has been fragile due to multiple factors, including expectations of additional supply from OPEC+ members and the resolution of a dispute that has been restricting Libyan oil exports. The group’s internal discussions reflected concerns over the weakening demand outlook. While OPEC+ ministers are scheduled to meet again on December 1 to assess broader policy, a select group of key ministers from the coalition, known as the Joint Ministerial Monitoring Committee, is set to gather in October to evaluate the situation and recommend any necessary changes.