OPEC+ members delay plans to hike production by two months after oil price slump
The increases were part of a plan to gradually return a broader 2.2 million barrels per day of supply to the market over the following months.
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A general view of signage at the headquarters of the Organization of the Petroleum Exporting Countries (OPEC) on Feb. 29, 2024 in Vienna, Austria.
Thomas Kronsteiner | Getty Images News | Getty Images
Members of the OPEC+ oil alliance have delayed plans to hike production by a scheduled 180,000 barrels per day in October, as part of a program to gradually return a broader 2.2 million barrels per day to the market over the following months.
The increase has been delayed by two months, according to two OPEC+ sources, who could only speak anonymously because of the sensitivity of the talks.
The 2.2 million-barrel-per-day decline had been a short-term voluntary cut implemented by just eight members of the OPEC+ alliance.
Crude futures, which slumped in the earlier part of the week, picked up on Thursday, with the Ice Brent contract with November expiry was trading at $73.63 per barrel at 3:29 p.m. London time, up 1% from the previous settlement. The front-month October Nymex contract was at $70.17 per barrel, higher by 1% from the previous close price.
The 2.2-million-barrel-per-day cut, which was implemented over the second and third quarter, was due to expire at the end of this month. It was undertaken by Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates as a voluntary reduction that falls outside of the official policy binding all members of the OPEC+ coalition, which sums the Organization of the Petroleum Exporting Countries and its allies.
Under official policy, OPEC+ will produce a combined 39.725 million barrels per day next year. A subset of the group's members are separately curbing their output by another 1.7 million barrels per day throughout 2025, also on a voluntary basis.
The details and timelines of these deals have not been adjusted as a result of the latest talks, one of the OPEC+ sources said.
Oil prices have been weighed by a somnolent post-Covid-19 recovery in demand from the world's second-largest economy and foremost crude oil importer, China. On the supply side, key OPEC+ members Iraq and Kazakhstan have repeatedly produced above their monthly quotas under the alliance's agreement and have submitted plans for additional output cuts to compensate these excesses by September 2025.
Outages in north African OPEC member Libya have also muddied the landscape of supply-demand fundamentals, amid ongoing market uncertainty whether the political standoff endangering the country's nearly 1.2-million-barrels-per-day production could be resolved imminently or stretch into the long term.
