OPEC+ delays vital oil output decision until April 2026 as demand falters
- OPEC+ postponed production increases again amidst concerns of looming supply surplus for 2025.
- Brent crude prices fell due to analysts forecasting a supply surplus despite OPEC+ cuts.
- The ongoing market strategy indicates OPEC+'s commitment to supporting prices through output management.
On December 5, 2024, OPEC+ agreed to delay its planned production hike for the third consecutive month as a response to ongoing concerns about a slowdown in global oil demand and rising production outside the group. This decision, made at a meeting where eight OPEC+ members produce around half of the world's crude oil, means that significant supply reductions will continue in order to uphold oil prices. The cuts by OPEC+, which were originally intended to be unwound starting in October 2024, reflect the cartel's strategy to navigate an oversupplied market due to increased output from non-OPEC nations and weaken demand forecasts. The participants will extend existing voluntary output cuts of 2.2 million barrels per day until April 2025, with gradual monthly increases planned until September 2026, amounting to an overall strategy designed to stabilize oil prices over the long term. As of recent reports, Brent crude was trading around $71.43 per barrel, with analysts indicating fears of a surplus in 2025 due to anticipated production increases and weaker demand. Market reactions remain mixed as further US production expansion could significantly alter the balance of supply and demand in oil markets, complicating OPEC's efforts to maintain price stability. The group's strategy reflects a belief that maintaining a tight market will ultimately lead to better returns on investments, as they continue to monitor external economic and political developments that could impact oil prices.