The OPEC Plus group confirmed that it will not make any amendments to its oil production plans, despite expectations of a surplus in the market in the coming months. In a statement issued after an online monitoring meeting on Wednesday, the 23-nation group, led by Saudi Arabia and Russia, did not announce any changes to its plans.
The group plans to begin a series of monthly increases, starting with a 180,000 bpd increase in December, after delaying the original schedule by two months due to market fragility.
During the past two days, oil prices rose by more than 5% after the attacks launched by Iran, an OPEC member, against Israel in a new escalation of the conflict that has been ongoing in the Middle East for a year. However, at $75 a barrel, prices remain 14% below July levels, as traders focus on weak demand in China and rising supplies from the Americas.
Although this decline may be beneficial for consumers and central banks in light of interest rate cuts, it poses a financial threat to OPEC and its allies.
Saudi Arabia lowered its growth forecasts this week and pointed to a larger budget deficit than expected, as the costs of economic reforms exceed revenues. At the same time, Russia relies heavily on energy revenues to finance its war against Ukraine.
The meeting of the Joint Ministerial Committee to Monitor Production on Wednesday focused on the failure of Iraq, Kazakhstan and Russia to implement the agreed-upon production cuts.
Although these countries “reaffirmed their strong commitment” to the agreement, they are still producing quantities exceeding their agreed-upon quotas, and have not yet begun additional reductions as compensation for exceeding the quotas.
OPEC+ plans to restore about 2.2 million barrels per day in monthly batches from December until the end of 2025, and will allow an additional increase to the UAE in recognition of its increased production capacity.
Despite these plans, analysts from institutions such as JP Morgan and Citigroup express doubts that OPEC+ will continue to implement these increases, especially with the International Energy Agency’s expectations that consumption will grow by less than one million barrels per day in 2025, while supplies will increase by 50% more, Which will lead to a surplus in the market.
