“①The agreement to reduce daily crude oil production by 2.2 million barrels reached by OPEC+ members has now been postponed until the end of December; ② Market observers state that if this organization fails to reach a true agreement to control production in the future, oil prices may fall to $30 or $40 per barrel next year; ③ According to forecasts, this organization is more likely to gradually phase out production cuts early next year, rather than immediately withdrawing completely.
Financial Union News on November 13th (Editor Zhou Ziyi) Market observers state that if the OPEC+ organization cancels the existing voluntary production cut agreement, crude oil prices could drop significantly over the next year.
The global energy analysis manager, Tom Kloza, from oil price reporting agency OPIS, expressed concerns about oil prices for 2025, indicating a stronger sentiment than any year since 2010.
"If OPEC fails to reach a true agreement to control production, oil prices may fall to $30 or $40 per barrel. Looking back over the years, the market share of OPEC member countries has indeed shrunk.
If oil prices drop to $40 per barrel, it would mean a reduction of about 40% from the current crude oil prices. Currently, the trading price of global benchmark Brent crude oil futures is $72 per barrel, while the price of US West Texas Intermediate crude oil futures is approximately $68 per barrel.
At the same time, Henning Gloystein, the Energy, Climate, and Resources Director of Chang Chun Eurasia Group, shares the same view, stating that considering that oil demand growth next year may not exceed 1 million barrels per day, the complete removal of the OPEC+ production cut agreement in 2025 "will undoubtedly lead to a significant drop in crude oil prices, possibly falling to $40 per barrel."
Saul Kavonic, Senior Energy Analyst at MST Marquee, believes, "If OPEC+ relaxes production cuts without considering demand, it would actually lead to a price war for market share, potentially causing oil prices to fall to their lowest point since the COVID-19 pandemic."
However, analysts also point out that the alliance is more likely to choose to gradually phase out production cuts early next year, rather than immediately withdrawing completely.
The original agreement of a daily production cut of 2.2 million barrels by the eight OPEC+ member countries was supposed to be implemented in the second and third quarters of this year, scheduled to expire at the end of September. However, in September, in order to curb the decline in oil prices, OPEC+ postponed this voluntary production cut plan by two months, until the end of November.
Subsequently, earlier this month, OPEC once again decided to further postpone the production cut plan by one month, until the end of December.
Gloystein from the Chang Chun Eurasia Group emphasized that the pressure on oil prices is also driven by a clearly oversupplied market, especially as countries outside OPEC, like the USA, Canada, Guyana, and Brazil are also planning to increase supply.
On Tuesday of this week (November 12), in its monthly report, OPEC lowered its petroleum growth forecasts for the next two years, revising the global oil demand growth forecast for 2025 from 1.6 million barrels per day to 1.5 million barrels per day.
Furthermore, the International Energy Agency (IEA) is set to release its latest monthly global oil market assessment on Thursday (November 14). The institution has already projected that as the world shifts from fossil fuels to electric cars to prevent catastrophic climate change, the pace of demand growth will slow down.
