In a virtual meeting held on Thursday regarding the planned output increase for October, OPEC+ reportedly decided to postpone the increase to October and November, citing recent drops in crude prices to their lowest in nine months.
The group also indicated that it may further pause or reverse the output hikes if necessary, Reuters reports.
OPEC said, "The eight participating countries have agreed to extend their additional voluntary production cuts of 2.2 million barrels per day for two months until the end of November 2024,"
The news lifted oil prices by over $1 a barrel, with Brent futures briefly above $74 before retreating. Prices had hit their lowest of the year on Wednesday due to concerns over demand and production possibly coming back to Libya.
OPEC+ had earlier planned a 180,000 bpd increase for October but is currently withholding 5.86 million bpd—about 5.7% of global demand—to stabilize the market amid demand uncertainty and rising external supply.
Last week, OPEC+ was prepared to proceed with the increase, but concerns about fragile oil market sentiment—due to potential additional supply from OPEC+ and resumed Libyan exports, along with a weakening demand outlook—prompted a reassessment.
As per the report, OPEC+ ministers will hold a full policy meeting on December 1, while the Joint Ministerial Monitoring Committee, which can suggest policy changes, will meet on October 2.
RBC Capital analyst Helima Croft suggested it might be wise for OPEC+ to delay returning extra barrels until December. The planned October increase was intended for the eight OPEC+ members who had agreed in June to begin unwinding the 2.2 million bpd cut—the group's most recent reduction—starting from October 2024 to September 2025.
The remaining OPEC+ cuts of 3.66 million bpd, established in previous agreements, will remain in effect until the end of 2025.
OPEC's statement on Thursday said that after the end of November, this cut will be gradually phased out on a monthly basis, starting on December 1 and continuing until November 2025, "with the flexibility to pause or reverse the adjustments as necessary."
On Wednesday, Citi stated that if OPEC+ doesn't cut production further, the average price of oil could fall to $60 per barrel in 2025, driven by reduced demand and increased supply from non-OPEC countries.
Nevertheless, Citi noted that while a technical rebound in oil prices is possible, the market may lose confidence in OPEC+ maintaining the $70 per barrel level if the group doesn't commit to extending current output cuts indefinitely.
Last week, Goldman Sachs revised its oil price forecasts, catching the market off guard during a surge in crude prices driven by rising geopolitical tensions in the Middle East. The 2025 average Brent price forecast has also been lowered to $77 per barrel from a previous estimate of $82.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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