OPEC+ producers, including Russia, have decided against postponing the planned series of monthly oil supply increases set to commence in April.
This decision, as announced by Russian Deputy Prime Minister Alexander Novak on Monday and reported by Russia’s RIA state news agency, indicated that the group is confident in the oil market’s ability to absorb the additional supply.
The move could potentially lead to lower oil prices as supply increases, but it also signals a belief in the ongoing recovery of global oil demand.
Additionally, Bloomberg News reported on Monday, citing information from delegates, that the Organization of the Petroleum Exporting Countries (OPEC), Russia, and other allied nations, was actively considering the possibility of delaying planned increases in oil supply.
This deliberation was taking place despite the public calls from US President Donald Trump for OPEC+ to take action to lower oil prices.
The potential move by OPEC+ to postpone supply increases could have significant implications for the global oil market, potentially leading to higher oil prices and increased tensions with the US.
No official statement yet
However, there have been no official statements by the cartel in regards to postponing the unwinding of the voluntary production cuts from April any further.
Some analysts, including those from Morgan Stanley, have projected that OPEC+ will maintain its current output levels for an extended period.
This decision would be in line with OPEC+’s ongoing strategy to stabilise oil markets and support prices amidst a backdrop of global economic uncertainty and fluctuating demand.
The extension of the current output levels could help to prevent a supply glut and maintain upward pressure on oil prices, which would benefit oil-producing nations.
However, it could also lead to concerns about inflation and potential negative impacts on oil-consuming nations, particularly those experiencing economic challenges.
OPEC+’s decision on whether or not to extend the current output levels will be closely watched by market participants, policymakers, and consumers around the world.
OPEC and its allies are scheduled to meet in March to take a decision on its production levels from April.
Massive output cuts
Currently, the group along with its allies are withholding around 5.85 million barrels per day of crude oil from the market.
This is roughly equivalent to 6% of global oil supply.
Within this cut, 2.2 million barrels per day of production cuts are voluntarily adhered to by eight members of OPEC+, including Saudi Arabia and Russia.
OPEC+ decided in December to postpone raising output until April 2025, and to continue its current level of production cuts through the first quarter of 2025.
The voluntary output cuts were scheduled to expire in June 2024.
However, OPEC had extended these cuts multiple times last year to keep oil prices higher.
Brent oil prices had averaged in the mid $70 per barrel region for most of 2024, and steep production cuts had failed to provide meaningful support above the crucial $80 per barrel region.
Most OPEC+ countries want oil prices to trade above $80 a barrel to support their economies.
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