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The OPEC+ group faced a “reality check” in discussions about its production policy and had the double task of attending to fundamentals and at the same time putting together something to assuage the negative market sentiment, Saudi Energy Minister, Prince Abdulaziz bin Salman, told CNBC in an exclusive interview on Friday.
The OPEC+ alliance decided on Thursday to delay the start of the easing of the 2.2 million barrels per day (bpd) cuts to April 2025. OPEC+ has already postponed twice the beginning of the output increase. January 2025 was set as the point from which producers would begin to add supply—that was before Thursday’s meeting.
Now the start is April 2025, while the group also extended the period in which it would unwind all these cuts until September 2026.
“Yesterday’s meeting showed how flexible OPEC+ can be,” the Saudi minister told CNBC’s Dan Murphy.
Asked about whether the third deferral of the production increase signals that OPEC+ is losing confidence in a near-term demand recovery, Abdulaziz bin Salman said,
“We honestly believe that the market next year would be better than what is being projected.”
The primary reason for OPEC’s deferral of the production increase to the start of the second quarter is the fact that the first quarter in any year is a weak consumption period, the Saudi official said.
“The first quarter is not a good quarter to bring volumes,” Abdulaziz bin Salman said. “That quarter is known to be a quarter for building stocks.”
The deferral, while primarily motivated by fundamentals, would give OPEC+ a better view on China’s growth, Europe’s growth, U.S. policy, interest rates, and inflation in key developed markets, the Saudi energy minister said.
Oil prices have been little changed since OPEC+ announced its decision on Thursday. On Friday morning ET, oil was set for a weekly decline.
