OPEC+ agreed to delay production growth for three months

Published at: 05/12/2024 10:03 PM

The OPEC+ alliance, led by Saudi Arabia and Russia, decided this Thursday, December 5, to postpone for three months, until April 1, 2025, the entry into force of its plan to gradually increase its supply of crude oil, reported the SWI portal.

The decision was taken at a teleconference by the ministers of the sector of the eight 'petrostates' who in 2023 pledged to implement voluntary and additional pumping reductions to those they had already agreed with the rest of the members of the alliance, the Organization of Petroleum Exporting Countries (OPEC) said in a statement.

This writing thus refers to the total of 2.2 million barrels per day (mbd) that Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman withdrew from the market a year ago and that they wanted to gradually return to production starting January 1, reports EFE.

“These countries will extend their additional voluntary adjustments of 2.2 mbd, which were announced in November 2023, until the end of March 2025 and then (...) will phase them out gradually on a monthly basis until the end of September 2026,” explains OPEC+.

He specifies that last June they had agreed on a plan to open the faucets month by month, initially starting in October 2024.

However, faced with downward pressure on oil prices due to weakening demand in China and increased supply from the United States, the group postponed the entry into force of the pact twice.

Now they postpone it once again, until April 1, and they are also extending from 12 to 18 months the period in which they expect to have completely returned the volume of barrels removed, so that the monthly increases - initially of 180,000 barrels per day per month - will be more moderate.

This decision may be revoked or postponed once again if ministers consider that the market is not ready to absorb more barrels.

The meeting this Thursday, 05, took place during the plenary session of the OPEC+ ministerial conference, where it was agreed to extend for another year, until the end of 2026, the rest of the cuts agreed by 19 of the 22 member countries of the alliance, totaling 3.66 mbd.

With this, the total share of the combined production of the 19 countries will remain at 39.725 mbd - about 39 percent of the world's oil supply - until December 31, 2026.

Some OPEC partners, such as Venezuela, Iran and Libya, are exempt from the commitment to reduce their extractions due to the involuntary limitations of their oil activity that they face as a result of various causes, such as sanctions or armed conflicts.

“The meeting was held to reinforce the precautionary efforts of OPEC+ countries, with the objective of supporting the stability and balance of oil markets,” the ministers said in the statement.

They highlight that with the decision of this Thursday, 05, they remain faithful to their “approach of being cautious, proactive and preventive” when establishing their oil policies.

The next OPEC+ ministerial conference has been convened for May 28, 2025.

Mazo News Team