OPEC+ will start increasing oil production in 2025

The OPEC+ group will start adding supply to the market in 2025 for the first time since 2022, Jim Burkhard, vice president of research at S&P Global Commodity Insights, said at the Asia Pacific Petroleum Conference (APPEC) on Monday.

“We think in 2025, for the first time in several years, for the first time since 2022, OPEC+ will increase production,” Burkhard said at S&P’s Singapore conference, reported by Reuters.

Last week, the OPEC+ alliance led by Saudi Arabia and Russia decided to delay the cancellation of production cuts that were planned to start in October. The first supply addition of 180,000 barrels per day (bpd) is now expected for December.

During a virtual meeting on Thursday, the eight OPEC+ members that were slated to begin cutting cuts in October agreed to extend current cuts until the end of November, “after which these cuts will be phased out on a monthly basis beginning December 1 2024.”

OPEC+ added the warning that it would still have “the flexibility to pause or reverse adjustments as needed,” referring to additions to global supply.

The decision to delay the OPEC+ supply increase came after oil prices collapsed early last week to a nine-month low and the lowest so far this year. Amid weaker-than-expected Chinese demand and concerns about near-term Chinese and US demand, the prospect of OPEC+ adding supply as early as October has markets worried that the oversupply next year will be larger than previously thought.

Concerns over China’s 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 the market’s bearish sentiment over the past week.

OPEC+’s announcement of a delay in increasing supply, however, did little to calm markets and oil prices fell to their lowest levels since June 2023 on Friday amid worries about oil demand.

By Tsvetana Paraskova for Oilprice.com

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