OPEC+ will delay oil production increase by 2 months

OPEC+ has reached an agreement to delay the reversal of its production cuts that were planned to begin in October, OPEC+ sources told Bloomberg on Tuesday. The group now plans to ease production cuts starting in December.

OPEC+’s existing plan is to begin the careful process of rolling back the current voluntary production cuts starting next month, which would add 180,000 bpd back to the market in October. OPEC+ has long maintained that its plan to reduce cuts was tentative and dependent on market balance. While global oil markets are currently considered to be in deficit, oil prices are falling and have fallen by nearly $7 per barrel in the past week alone.

OPEC+ members have given up oil market share in an effort to balance the market. Meanwhile, other non-OPEC+ members have given up what OPEC+ has given up. Some OPEC+ members have also come under fire for not fully sticking to the agreed production plan.

News that OPEC will delay plans to restore production at a time when oil prices are falling sent prices up more than 1 percent. Markets have apparently been unconcerned with fundamentals of late, which point to a slight deficit. Instead, markets were more in tune with weak economic data and subsequent fears about oil demand from China and the United States – and it appears that OPEC+ is also looking at this economic data.

Oil prices tumbled earlier in the week after the market began anticipating additional production from OPEC+ and on news that some members such as Iraq continued to increase, and August survey data showed that Libya’s sharp drop in production was partially offset by the group share. violators.

Oil prices rose Thursday morning, trading up 1.21% as of 10:30 a.m.

By Julianne Geiger for Oilprice.com

More top reads from Oilprice.com