OPEC+ Delays Oil Production Increases

Investing.com — OPEC+ has decided to delay the restart of its oil production increases by three months, as reported by Bloomberg, citing delegate sources. This marks the third postponement due to crude prices remaining under pressure amid expectations of a surplus.

The alliance, led by Saudi Arabia and Russia, had initially planned a supply increase of 180,000 barrels per day starting in January. However, the new timeline pushes this to April, with increases implemented at a slower pace than originally outlined.

The United Arab Emirates (UAE) will also hold off production increases until April. The UAE had previously aimed for a monthly boost of 300,000 barrels per day starting in January, reflecting its investments in production capacity.

OPEC+ first announced in June its plans to gradually restore 2.2 million barrels per day of output in monthly increments after cuts initiated in 2022. Yet, the plans have faced setbacks due to declining oil demand in China, the world’s largest consumer, alongside increasing supply from the United States, Brazil, and Canada.

The International Energy Agency (IEA) estimates that global oil markets may face a surplus in 2025 even if OPEC+ does not add any extra barrels.

As a reflection of the challenges confronting OPEC+, the latest agreement means the group will not fully unwind its voluntary production cuts until September 2026, a year later than initially intended.

Oil prices have plummeted roughly 18% since early July, as traders shift their focus from tensions in the Middle East to China’s economic slowdown and its related challenges.

This decision to delay supply increases also enables OPEC+ to assess the potential impact of President-elect Donald Trump’s possible return to the White House. Trump has suggested he may reinstate the “maximum pressure” strategy on Iran’s oil exports, a policy from his previous term focused on curtailing Tehran’s nuclear ambitions. Reducing Iranian oil sales could create opportunities for regional rivals to fill.