OPEC+ members will delay increasing oil production

The OPEC+ alliance of oil producers has postponed plans to reverse several formal and voluntary crude production cuts until 2026, amid a tepid outlook for global demand, according to delegated sources and internal documents.

The sources could only speak anonymously due to the sensitivity of the discussions.

As part of its formal production strategy, the broader OPEC+ coalition now limits its combined output to 39.725 million barrels per day (bpd) until December 31, 2026, after applying this quota only throughout 2025.

Eight OPEC+ members will now extend their voluntary production cut of 2.2 million barrels per day until the first quarter and begin gradually increasing production between April and September 2026. Several OPEC+ members will also postpone the outcome of a second production agreement of 1.7 million barrels per day. barrels per day reduced until the end of 2026. This latest production cut was previously only expected to last until 2025.

Despite these rounds of production cuts and the ongoing conflict threatening the hydrocarbon-rich Middle East region, global oil prices have remained weak for most of this year, pressured by a weak demand outlook. The February expiry Ice Brent contract and the January front end Nymex WTI futures contract were both trading flat at 1:31 p.m. London time compared to their Wednesday closing prices.

Added to the geopolitical uncertainty is the imminent return to the White House of President-elect Donald Trump, who led his election campaign on the promise of further freeing up production from the world's largest oil producer.

“While today's decision by OPEC+ to delay the implementation of some cuts in its oil production until April 2025 gives the group time, the context of weak global oil demand means it could easily find yourself in a similar position in three months,” analysts at Capital Economics said in a note.

“In our view, oil price fundamentals remain weak and risks to prices are tilted to the downside.”