OPEC+ has announced a delay in its planned oil production increase from January to April 2025, citing weaker-than-expected global demand and competition from non-OPEC producers. The decision, finalized during an online meeting on Thursday, also extends the unwinding of production cuts to September 2026, a year later than previously scheduled.
The alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, has been navigating challenging market conditions. A combination of China's sluggish economic recovery and rising output from producers like Brazil and Canada has placed pressure on oil prices. Brent crude traded at $72.49 per barrel during Thursday's session, reflecting a market largely unmoved by the announcement.
OPEC+ members are currently withholding 5.86 million barrels per day (bpd) of output, or roughly 5.7% of global demand, under agreements made since 2022. These cuts include a 2 million bpd reduction by the entire group and additional voluntary cuts totaling 3.85 million bpd by eight member states.
The UAE, which had previously been slated to raise production by 300,000 bpd starting in January 2025, will now begin its output increase in April 2025. This adjustment reflects the group's broader strategy to manage supply cautiously in light of oversupply concerns.
Despite these efforts, oil prices have remained in a $70-$80 per barrel range for much of the year, with Brent crude hitting a low of $69 in September. The market's tepid response underscores the difficulty OPEC+ faces in balancing supply and demand amid competing global pressures.
The International Energy Agency (IEA) has projected that global oil markets face a surplus in 2025 even if OPEC+ does not add a single barrel, according to its recent analysis.The group's decision underscores the complexities of managing output in an environment of fragile demand and oversupply concerns.
Thursday's meeting also resulted in an agreement to extend the 2 million bpd and 1.65 million bpd cuts until the end of 2026. The gradual unwinding of the 2.2 million bpd voluntary cuts will now start in April 2025 and conclude in September 2026, according to OPEC sources.
