OPEC+ set to postpone planned oil production hike: Reuters

By Al Mayadeen English
Source: Reuters
5 Sep 2024 17:21
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Reuters cites sources as saying that an agreement between OPEC+ members are close to reaching an agreement on the matter.

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An Iraqi worker operates valves in Nihran Bin Omar oilfield, north of Basra (Image released in 2018, AP)

Two sources from OPEC+ informed Reuters on Thursday that the group is close to finalizing an agreement to postpone the planned oil production increase set for October, following a drop in crude prices to a nine-month low.

Oil prices have been falling due to concerns about a weak global economy and soft data from China, the world's biggest oil importer.

"It is likely that the countries will take action to balance the market by delaying the increase," one source said. OPEC+ was "almost there" on reaching an agreement, the other source noted.

With a delay by the world's largest oil bloc anticipated, benchmark Brent crude climbed to $73 per barrel on Thursday. However, it has still been near its lowest point since December 2023.

The scheduled increase involved an additional 180,000 barrels per day, part of the 5.86 million bpd that OPEC+ is withholding from the market. This supply represents approximately 5.7% of the world's total oil demand.

Last week, the bloc was prepared to move forward with the production hike.

However, growing concerns within the group have surfaced due to the uncertain outlook in the oil market, driven by the potential for increased supply from OPEC+, the resolution of the dispute blocking Libyan exports, and a weakening demand outlook.

HSBC said in a report it anticipates potential volatility in crude oil prices depending on OPEC+’s decision. An increase in production could lead to a market surplus from the first quarter of 2025 onwards and lower prices, while a delay might support prices in the short term.

OPEC+ had planned to increase oil production in October, following an agreement made in June to gradually reverse recent output cuts. This included reducing cuts by 2.2 million barrels per day from eight member countries between October 2024 and September 2025.

However, the larger cuts of 3.66 million barrels per day, agreed upon earlier, will remain in place until the end of 2025.

These reductions were originally made to support market prices due to uncertain demand and rising supply from outside the group.

Now, sources indicate that OPEC+ is considering postponing the scheduled October production increase, Reuters said.