OPEC+ Firms Up Deal for Three-Month Delay to Output Hike
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OPEC+ is making progress toward an agreement to delay its oil-production revival by another three months, delegates said.
The group has been holding discussions for the past week on postponing a sequence of supply increases, which is due to commence with an initial hike of 180,000 barrels a day in January. An impending glut is weighing on crude prices.
A delay of three months is the main proposal in these talks and it hasn’t drawn any opposition so far, said the delegates, who asked not to be identified because the discussions are private. The alliance is due to finalize its plans at an online meeting on Dec. 4.
There has been a flurry of shuttle diplomacy in the buildup to their gathering, with Saudi Arabian Energy Minister Prince Abdulaziz bin Salman and Russian Deputy Prime Minister Alexander Novak, the de facto leaders of the alliance, traveling last week to Iraq and Kazakhstan.
Baghdad, Moscow and Astana have all dragged their heels in delivering supply curbs, and one focus of the pre-meeting talks has been their need to improve compliance and make additional cutbacks as compensation for overproducing.
In June, the Organization of Petroleum Exporting Countries and its partners announced a road map for reviving 2.2 million barrels a day of halted production in monthly increments. The group has been withholding output since 2022 in a bid to stave off a surplus and defend prices.
But it has been forced to delay the restart twice as faltering demand growth in China and swelling supply from the Americas weigh on crude prices. Brent futures have retreated 17% since early July to trade near $73 a barrel in London.
Even if OPEC+ delays the hikes penciled in for the first quarter, its oil production is still set to increase. The United Arab Emirates has been accorded the right to slowly ramp up an additional 300,000 barrels a day of production over the course of 2025, in recognition of recent investments in its capacity.
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Emirati officials say this increase is ring-fenced from any negotiations later this week about whether to proceed with the January supply hike, though one delegate from another member country said it may be up for debate.
On Dec. 1, Saudi Crown Prince Mohammed bin Salman met with United Arab Emirates President Sheikh Mohammed bin Zayed in the city of Al Ain.
Kazakhstan may also present a challenge next year, as it proceeds with a major expansion of the Tengiz oil field. The extra barrels may further test the ability of OPEC+ to keep world markets in balance.
Written by Salma El Wardany, Grant Smith and Fiona MacDonald
