OPEC+ Discusses Delaying Supply Increase After Oil Price Crash

• Oil prices fell to a nine-month low on Wednesday morning amid concerns over rising demand and potential supply.
• OPEC+ is reconsidering its plan to reduce production cuts in October due to falling prices.
• Since then, oil prices have recovered slightly on news that OPEC+ is considering maintaining its production cuts.

OPEC+ has begun discussing a possible delay in output cuts after oil prices tumbled in recent days to a nine-month low, sources in the alliance told Reuters on Wednesday.

On Wednesday morning, oil prices reversed their decline after reports emerged of a possible delay in reducing cuts. Both benchmarks were up about 1% as of 7:15 a.m. EDT.

Oil prices fell to their lowest level since late last year on Tuesday, with Brent falling below $74 and WTI crude prices briefly dipping below $70 a barrel. Prices were weighed down by speculation that began late last week that OPEC+ would begin adding 180,000 barrels per day (bpd) in October as previously planned.

Concerns over Chinese oil demand, fears of a slowdown in the US and European economies and hopes of a resumption of production shutdowns in Libya also added to bearish market sentiment in recent days.

After prices fell nearly 5% on Tuesday, reports began to emerge on Wednesday that the OPEC+ group is now reconsidering canceling its October cuts.

The alliance is discussing a delay, OPEC+ delegates told Bloomberg.

A source at the group told Reuters that “There are suggestions to delay the increase”, while another source noted that a delay looks “very possible” at this point.

Most OPEC+ producers need prices well above $80 a barrel to balance their budgets.

“The more pressure we see on prices, the more likely it is that OPEC+ will be forced to abandon plans to restore supply to the market,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a note on Wednesday .

“However, with the balance looking weak through 2025, the question is when the group will eventually be able to bring supply back to the market without putting significant pressure on prices,” they added.

By Tsvetana Paraskova for Oilprice.com

More top reads from Oilprice.com