Opec+ to ‘delay oil output hike for two months’

Reuters

• Increase was planned for October
• Cuts to be phased out from December
• Oil prices up by over $1 a barrel

Opec+ has agreed to delay a planned oil output increase for October and November after crude prices hit their lowest in nine months.

A statement on the oil producer group’s website said: “The eight participating countries have agreed to extend their additional voluntary production cuts of 2.2 million barrels per day for two months until the end of November 2024, after which these cuts will be gradually phased out on a monthly basis starting December 1, 2024.

“The overproducing countries also reconfirmed their commitment that the entire overproduced volume will be fully compensated for by September 2025.”

Three sources from Opec+ confirmed the news to Reuters on Thursday.

Oil prices have been falling along with other asset classes due to concerns about a weak global economy and soft data from China, the world’s biggest oil importer.

“Two months delay,” one of the sources said. The three sources declined to be identified by name.

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The news lifted oil prices by over $1 a barrel, with Brent futures trading at $73.72 a barrel by 15:08 GMT.

Opec+’s planned hike was for 180,000 barrels per day (bpd), a fraction of the 5.86 million bpd of output it is holding back, equal to about 5.7 percent of global demand, to support the market due to uncertainty about demand and rising supply outside the group.

Last week, the group, which is made up of the Organisation of the Petroleum Exporting Countries and allies led by Russia, looked set to proceed with the increase.

But fragile oil market sentiment over the prospect of more supply from Opec+ and an end to a dispute halting Libyan exports, coupled with a weakening demand outlook, have raised concern within the group.

Opec+ ministers hold a full meeting to decide policy on December 1. A group of top Opec+ ministers – called the Joint Ministerial Monitoring Committee and that can recommend changes – gathers on October 2.

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A dispute between rival factions in Libya over control of the central bank that led to a loss of at least 700,000 bpd of production has supported oil in recent weeks.

Prices, however, slumped by about 5 percent on Tuesday on news that a possible deal to resolve the conflict was in the works.

Weak Chinese demand and a slump in global refining margins, which could prompt refiners to process less crude, have also weighed.

RBC Capital analyst Helima Croft said in a note that it may be prudent for Opec+ to wait until December before returning extra barrels.

The planned October increase was set to come from Opec+ members who agreed in June to start unwinding their most recent layer of output cuts from October 2024 to September 2025.

The remaining cuts of 3.66 million bpd, agreed in earlier steps, will remain in place until the end of 2025.