Is OPEC+ about to increase production? Via Investing.com

Investing.com — Stifel analysts on Thursday acknowledged a Reuters report that said OPEC+ may be preparing to boost oil production despite the possibility of lower prices in the near term.

The firm said the output increase, set for December 1, would mark a change from the group’s recent delays in output increases for October and November.

Saudi Arabia, which leads the group, appears prepared to sacrifice prices to regain market share, although it is not expected to launch an all-out price war, Stifel said.

They pointed out that Saudi production has fallen significantly from its peak of 11.0 million barrels per day (mbpd) in 2022 to around 9.0 mbpd in July 2024, below 10% of global supply.

Total OPEC+ production is currently 41.7 mbpd. The potential increase in production would greatly affect oil prices and oilfield services stocks, according to the company.

They note that in the US, production also rose, up 1.1 mbpd from 2023 levels.

In terms of market impact, Stifel suggests that tanker stocks including International Seaways (NYSE: ), Scorpio Tankers (NYSE: ), Ardmore Shipping (NYSE: ) and DHT Holdings (NYSE: ) could benefit from production growth.

However, they believe that oil services stocks may face headwinds. Stifel recommends sticking with high-quality names like Baker Hughes, Liberty Energy and Cactus (NYSE: ) in this environment.

China, the world’s largest importer of , is said to remain a wildcard.

“Although difficult to gauge, officials appear to be working on stimulus to meet the 5 percent economic growth target in 2025,” Stifel wrote. “China’s oil demand stands at around 16.8 mbpd, barely up from 2023, after a 2 mbpd increase in 2023 from 2022. Recall demand from China has been a major driver of global oil demand growth over the past decade and remains a critical variable in global oil consumption.”

Meanwhile, the firm says it expects midstream companies to fare better in weaker prices, with diversified names such as Enterprise Products Partners (NYSE: ), Energy transfer (NYSE: ) and MPLX (NYSE: ) are better positioned to handle volatility.