Sources and analysts say that OPEC+ has very little room for maneuver in its oil policy at the December meeting: due to weak demand, increasing production poses risks, and deepening cuts is difficult as some member countries wish to increase production.

OPEC+ has postponed its plan to gradually increase production this year by several months.

According to three OPEC+ sources familiar with the discussions, OPEC+ may again delay increasing production at its meeting on December 1 due to weak global oil demand. The last time ministers postponed increasing production by a month was at the meeting on November 3.

A source who wished to remain anonymous said, "I can't say this is very popular within the group, but no one strongly opposes delaying until the first quarter of next year." Two other sources said it is too early to say what decision the organization will make.

OPEC+ originally planned to gradually restore production through small increases over several months in 2024 and 2025. However, slowing global demand and increased production from countries outside the group have affected this plan.

This has led OPEC+ to maintain the cuts longer than expected. OPEC+ has taken a series of measures to support the market since 2022, reducing output by 5.86 million barrels per day, accounting for approximately 5.7% of global demand. Despite OPEC+ cutting production and delaying increases, oil prices have mostly remained between $70 and $80 per barrel this year.

Sources say that before increasing the production of OPEC+ member countries, Saudi Arabia wants to address some internal issues related to the poor implementation of production targets by certain OPEC+ member countries.

In recent months, some member countries, including iraq, have reduced production, resulting in improved compliance. As long as demand supports it, this may provide some space for the group to coordinate a slight increase in supply.

However, increasing production in the face of weak market demand could weaken oil prices. OPEC+ can use this strategy to pressure competitors, but it would also hurt OPEC+ countries that rely on oil revenue. Many opec members need oil prices above 70 dollars to balance their budgets and cannot withstand prices below 50 dollars for long.

Nevertheless, the decline in OPEC+'s market share has led to speculation that it will inevitably initiate a price war to squeeze competitors out of the market. The last time OPEC did this was in 2014-2015, when it increased production to squeeze us shale oil companies.

According to calculations by Reuters based on data from the international energy agency, OPEC+'s production accounts for 48% of global supply, the lowest since its establishment in 2016, while market share exceeded 55% in 2016.

The usa has become the world's largest oil producer, with a daily output of over 20 million barrels, accounting for one-fifth of global production. OPEC's top producer Saudi arabia's crude oil output is less than 9% of the world's total oil, while OPEC's supply accounts for about 25%.

The price war in 2014 had a significant impact on shale oil producers, but ultimately failed to stop the shale oil boom. Over time, us shale oil and other producers also cut costs, making it more difficult for OPEC+ to win the next round.

According to consulting firm Rystad Energy, the average breakeven price for onshore oil production in the middle east is 27 dollars per barrel. Rystad estimates the cost in north america to be 45 dollars, well below the 85 dollars in 2014.

Aldo Spanjer from BNP Paribas said, "Crude oil prices must be below $40 to $45 in order to significantly reduce supply from non-OPEC countries."

The consolidation of the oil industry in the USA will also make it harder for OPEC+ to win a price war. Over the past two years, USA giants exxon mobil (XOM.N) and chevron (CVX.N) have acquired some of the largest shale oil producers. They are well-funded and have diversified portfolios.

Richard Bronze from Energy Aspects said, "We believe that speculation about a possible outbreak of a supply war is exaggerated. Unlike 2015-2016, the group recognizes that production from the USA and broader non-OPEC countries will not decline rapidly."

Analysts at Macquarie indicated that, given weak seasonal demand, the prospects for OPEC+ to increase production in the first half of 2025 do not look optimistic.

The likelihood of deepening cuts is also low, as several OPEC+ members are pushing for increases rather than reductions in output. The most prominent among them is the UAE, which believes its production has long been maintained at around 3 million barrels per day, far below its capacity.

OPEC+ sources said that the UAE has secured an increase quota for 2025, and any actions to delay an increase in production will need to address this issue. Iraq has also been pushing for an increase in quotas.

Walt Chancellor from Macquarie said, "We believe that ultimately a larger cut may be required to support oil prices next year, which may be difficult to accept."