OPEC+ agrees to delay December output hike for one month

OPEC+ has agreed to delay a planned December oil output increase by one month, the group said on Sunday, as weak demand notably from China and rising supply outside the group maintain downward pressure on the oil market.

Eight members of OPEC+, which groups the Organization of the Petroleum Exporting Countries plus Russia and other allies, were due to raise output in December as part of a plan to gradually unwind the group’s most recent layer of output curbs – a cut of 2.2 million barrels per day (bpd).

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However, weak demand and economic data raised concern in the group about adding more supply, sources told Reuters last week ahead of the decision to postpone the hike made on Sunday after consultations between ministers.

The eight countries decided to extend the 2.2 million bpd cut for a month until the end of December, OPEC said in a statement. They also “reiterated their collective commitment to achieve full conformity” with output targets, it said.

Oil prices closed on Friday just above $73 a barrel, supported in part by the prospect of a further delay to the OPEC+ increase. Even so, Brent crude is still not far from its lowest levels this year of below $69, reached in September.

OPEC+ had already delayed the increase from October because of falling prices, weak demand and rising supplies. An easing of investor concern about conflict in the Middle East disrupting the region’s oil output has also weighed on prices.

OPEC and Saudi Arabia have repeatedly said they do not target a certain price and make decisions based on market fundamentals and in the interest of balancing supply and demand.

The December hike was due to be 180,000 bpd, a small part of the total 5.86 million bpd of output OPEC+ is holding back, equal to about 5.7% of global demand. OPEC+ agreed those cuts in separate steps since 2022 to support the market.

Countries’ compliance with agreed output curbs has been in focus, particularly that of Iraq and Kazakhstan, which have been pumping above targets and have promised additional cuts to compensate for the excess.

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OPEC’s statement said the eight countries took note of recent announcements by Iraq, and by Russia and Kazakhstan, reaffirming their commitment to the OPEC+ agreement including making the compensation cuts.

Before Sunday’s one-month postponement, the eight OPEC+ members were due to gradually unwind the 2.2 million bpd cut by increasing supply in December 2024 and over the following months into next year.

The remaining OPEC+ cuts of 3.66 million bpd will stay in place until the end of 2025, as per an agreement in June 2024.

OPEC+ ministers hold a full meeting of the group to decide policy for 2025 on Dec. 1.