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Oil producers OPEC+ sharply cut its 2025 production plans on Thursday to support prices.
The group, led by Saudi Arabia and Russia, said it would delay plans to phase in the reintroduction of 2.2 million barrels of oil per day until April next year, and extend the ramp-up period by 18 months. It will be done. The cartel previously announced it would begin reintroducing crude oil in January.
OPEC announced on Thursday that the UAE had also agreed to postpone a quota increase of 300,000 barrels per day until April.
The overall result of the changes is that the group will pump 818,000 barrels per day less oil in 2025 than previously expected, provided its members comply with their quotas, analysts said. It is said that it will become.
“The 2025 plan calls for a huge amount of oil,” said Paul Horsnell, head of commodities at Standard Chartered. “It’s been diverted to the back. Two-thirds of the oil they were expected to bring in (in 2025) is now expected in 2026.”
The price of benchmark Brent crude rose 0.3% to $72.51 after the announcement, while its U.S. equivalent, West Texas Intermediate, rose 0.3% on the day to $68.73.
OPEC’s move comes as oil prices have fallen nearly 11% since just before the June meeting, when the Organization of the Petroleum Exporting Countries announced it would begin phasing out 2.2 million voluntary production cuts starting in September. .
“We think this is a very bullish deal because it eliminates a large portion of next year’s oil glut,” said Amrita Sen, founder of research and consulting firm Energy Aspects. “However, the market believes that (U.S. President-elect Donald) Trump wants oil prices to fall and therefore remains bearish.
The International Energy Agency said in its November oil market report that non-OPEC countries will increase oil production by 1.5 million barrels per day in 2025, meaning supply will outstrip demand even if OPEC+ maintains all production cuts. He said he was deaf. Next year’s production will be “more than 1 million barrels per day.”
But it also said the additional supply would help cushion the market against multiple geopolitical risks.
Helima Croft of RBC Capital Markets said the oil cartel chose to play it safe by taking decisive action.
“OPEC is essentially saying that the prudent thing to do is to continue to watch for signs of health in the demand outlook.Given the market uncertainty, OPEC is predictably pushing the pause button. “I think we decided to wait and see and take this issue up in the spring,” she said.
