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OPEC+ has reached a deal to delay the unwinding of its production cuts that were planned to begin in October, anonymous OPEC+ sources told Bloomberg on Tuesday. The group now plans to ease output cuts beginning in December.
OPEC+’s existing plan is to begin the careful process of rolling back the current voluntary production cuts starting next month, which would see 180,000 bpd added back into the market in October. OPEC+ has long maintained that its plan to roll back the cuts was a tentative one and dependent on market balance. While the global oil markets are currently believed to be in deficit, oil prices are falling and are down nearly $7 per barrel in the last week alone.
OPEC+ members have given up oil market share in an effort to balance the market. Meanwhile, other non-OPEC+ members have snapped up what OPEC+ has given up. Some OPEC+ members have also received criticism for not fully adhering to its agreed-upon production plan.
News that OPEC will delay its plans to add production back at a time when oil prices are sinking has bolstered prices by more than 1%. The markets have seemingly been unconcerned with fundamentals as of late, which are indicated a slight deficit exists. Instead, the markets have been more in tune with poor economic data and the subsequent oil demand fears out of China and the United States—and it appears OPEC+ is eyeing this economic data as well.
Oil prices crashed earlier in the week after the market began to anticipate additional production from the OPEC+ group, and on news that certain members like Iraq were continuing to increase, and August survey data showed that Libya’s significant output decrease was partially offset by the group’s quota violators.
