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OPEC+ delayed the revival of its oil production by three months, the third time it’s deferred the move while crude prices struggle amid a looming surplus.
The group led by Saudi Arabia and Russia pushed back the series of supply increases, which had been due to begin with a hike of 180,000 barrels a day in January. It will instead start in April and unwind the cuts at a slower place than previously planned, according to a statement from the alliance.
The United Arab Emirates also won’t make any production increases until April. The nation had previously won the right — separate from the group’s production cuts — to gradually add an extra 300,000 barrels a day in monthly stages starting January, in recognition of its recent investments in production capacity.
“OPEC has bought itself some time,” said Harry Tchilingurian, head of oil research and analytics at Onyx Commodities Ltd. “However, prices wait for no one, and if the demand outlook deteriorates further, then the support coming from current cuts will see diminishing returns and we could test a figure in the $60s.”
Brent crude was little changed at $72.42 a barrel as of 1:08 p.m. in London trading.
The Organization of Petroleum Exporting Countries and its partners had first announced in June that they would restore output halted since 2022, reviving 2.2 million barrels per day in monthly tranches. But its plans have been thwarted as oil demand falters in top consumer China, while supplies boom from the US, Brazil and Canada. Global markets face a surplus in 2025 even if OPEC+ doesn’t add a single barrel, according to the International Energy Agency.
In an indication of OPEC+’s supply predicament, Thursday’s agreement means the group will only have fully unwound its so-called voluntary production cuts by September 2026, a full year later than initially planned. A set of production quotas limiting the wider OPEC+ group were extended by one year to the end of 2026.
Oil prices have declined about 18% since early July as traders shrugged off turmoil in Middle East and focus instead the slowdown in China, which has grappled with a range of economic challenges. Citigroup Inc. and JPMorgan Chase & Co. have predicted that crude will keep sliding into the $60s next year, even if OPEC+ continues to restrain production.
That poses a financial threat for many members including the Saudis, who have already been forced to cut spending on lavish economic transformation plans. Their oil-market ally, Russian President Vladimir Putin, seeks revenue to continue waging war on Ukraine.
Pausing the supply restart also gives OPEC+ some time to assess the impact of President-Elect Donald Trump’s return to the White House. He has signaled he could renew the campaign of “maximum pressure” on crude exports from Iran, deployed during his first term to curtail Tehran’s nuclear program. Squeezing the Islamic Republic’s oil sales could leave a gap for its Middle East adversaries to fill.
On the other hand, Trump has also warned of punitive trade tariffs on several countries including China, which could deliver a fresh blow to Beijing’s economic activity and fuel consumption.
The cartel will meet again on May 28, according to the statement.
