OPEC+ Plans to Increase Oil Output

Investing.com — OPEC+’s reported plan to increase oil output from December 1 could lead to an earlier-than-expected rebound in supply, potentially putting downward pressure on crude prices, according to analysts at HSBC.

In their note to clients, the analysts indicated that if the Organization of the Petroleum Exporting Countries and its allies — known as OPEC+ — confirm these plans, it would signal the end of a long-standing period of supply tightening, during which the group limited production by approximately 3.4 million barrels per day since October 2022.

HSBC analysts noted, “The earlier return of OPEC+ barrels is incrementally bearish,” and projected a oil market surplus of roughly 600,000 barrels next year. They also expressed concerns about a continued oversupply in the medium term, stating that OPEC+ lacks the capacity to reverse remaining production cuts.

As a result, the analysts lowered their forecasts for Brent oil prices for 2025 and beyond from $76.5 per barrel to $70 per barrel.

On Tuesday, oil prices fell sharply as concerns surrounding weak demand growth overshadowed fears that escalating tensions in the Middle East might impact global supply. As of 06:10 ET, the Brent contract had dropped 1% to $71.02 per barrel, while U.S. crude futures (WTI) were down 1.2% to $67.36 per barrel.

Israel announced early Tuesday that its troops had begun “limited” raids against Hezbollah targets near the Lebanese border, raising the risk of a conflict that could further destabilize the oil-rich region with potential U.S. and Iranian involvement.

Nevertheless, the impact was muted due to a significant decline in Chinese manufacturing activity in September, suggesting a potential slowdown in future demand from the world’s largest crude importer. The American Petroleum Institute industry group is expected to release its weekly estimate of U.S. crude oil and fuel stockpiles for the week ending September 27.