OPEC+ has agreed to postpone the December production increase plan by one month. This is the second delay, as crude oil prices continue to struggle amid fragile economic prospects.

International oil prices opened higher on Monday, with WTI crude oil futures trading at $70.43 per barrel.

OPEC stated on its website on Sunday that OPEC+, led by Saudi Arabia and Russia, originally planned to increase daily output by 0.18 million barrels starting from December, but they have now decided to maintain supply limits for that month.

Due to weak demand and expanding supply in the Americas putting pressure on oil prices, OPEC+ has delayed the production increase plan set to start from October. Brent crude futures prices have dropped 17% in the past four months, nearing $73 per barrel, which is too low for many other countries in Saudi Arabia and the OPEC+ group to cover government expenses.

Harry Tchilinguirian, Head of Oil Research at Onyx Commodities Ltd., said: "The market environment has won. OPEC+ has shown that it cannot ignore macroeconomic realities, indicating soft oil demand growth."

As expected by many traders, further postponing production increases may not help boost the market. The International Energy Agency (IEA) in Paris estimates that even without an increase in supply by the OPEC+ alliance, the global market will still face an oversupply situation next year. Citigroup and JPMorgan predict oil prices to fall to $60 by 2025.

Analyst Giovanni Staunovo from UBS Group stated that OPEC+'s move is "somewhat positive". He said the market will now focus on Iran's response to attacks on Israel and the outcome of the US election.

The crude oil market has largely shrugged off the impact of the conflicts in the Middle East over the past year, including Israel's recent retaliatory strike against Iran, as traders increasingly believe that oil transportation from the region will not be affected.

According to data from the International Monetary Fund, Saudi Arabia needs a price level close to $100 per barrel in order to fulfill Crown Prince Mohammed Bin Salman's ambitious economic plans. Saudi Arabia's oil market partner, Russian President Putin, also needs funds to sustain the Russia-Ukraine conflict.

Amrita Sen, Research Director at consulting firm Energy Aspects Ltd, said: "To me, the impact of the postponed production increase is more about sentiment than actual figures. The market has consistently misconstrued that OPEC+ aims to flood the market with increased production to regain market share. On the contrary, their primary focus remains on controlling oil inventories."

In June of this year, OPEC+ outlined a roadmap to gradually restore the 2.2 million barrels per day production that had been halted over the past two years on a monthly basis.

However, their plans have been thwarted by continuously deteriorating fundamentals, shrinking demand, and increasing supplies from the United States, Brazil, Canada, and Guyana. In August, U.S. daily oil production surged to 13.4 million barrels, setting a new record for a single month.

Jorge Leon, Senior Vice President at consulting firm Rystad Energy AS, stated: "Given the geopolitical tensions in the Middle East and with the upcoming U.S. presidential election, it is entirely reasonable for OPEC+ to delay the voluntary production cuts for one month."

OPEC+ has been striving to urge some member countries—especially Russia, Iraq, and Kazakhstan—to fulfill their share in the production cut agreement. The three parties have pledged to better comply with the regulations and take additional restrictive measures to reduce overproduction, but have overall been producing in excess.

This coalition of 23 countries will hold a meeting on December 1st to review policies for 2025.

Editor/ping