OPEC+ postpones output hike amid unfavorable demand-supply conditions

The planned OPEC+ increase in oil output, originally scheduled for December 1, has been postponed as concerns mount over global market instability, which could exacerbate the anticipated decline in prices after the production hike. The rollback of the 2.2-million-barrel-per-day production cut has now been deferred to early January 2025.

This decision reflects a cautious approach by OPEC+ in light of key geopolitical events, including the upcoming US elections and China’s National People’s Congress (NPC). Members are opting to assess the potential impact of these events before finalizing any production commitments. Additional factors influencing the decision include concerns about weak demand, particularly from China, coupled with increased output from non-OPEC+ countries.

The United States, for instance, reported record-high oil production in October, reaching an unprecedented 13.5 million barrels per day. This surge has applied downward pressure on prices, despite recent Middle Eastern tensions and signs of recovering demand from China. The US production increase may have further contributed to OPEC+’s hesitation.

OPEC+’s outlook for implementing the output hike now hinges on potential economic stimulus from the Chinese government aimed at bolstering consumer demand and oil consumption. Meanwhile, the outcome of the US elections could significantly influence future import policies, shaping the extent to which international oil imports are encouraged or restricted in the United States.

International crude oil benchmarks surged nearly 3% following OPEC+'s decision.

Written by: Derek Yong