VINACHEM

OPEC+, which includes the Organization of the Petroleum Exporting Countries plus Russia and other allies, agreed to push back its December production increase by one month, the second delay to its plans to revive supply as prices continue to struggle amid a fragile economic outlook.

The group led by Saudi Arabia and Russia had intended to begin a series of monthly production increases by adding 180,000 barrels a day from December, but they will now keep supply restrained through that month, according to a statement posted on Opec’s website on Sunday (Nov 3).

They had already postponed the restart from October as faltering demand in China and swelling supplies from the Americas pressure prices. Brent futures have slumped 17 per cent in the past four months to trade near US$73 a barrel, too low for the Saudis and many others in Opec+ to cover government spending.

“Market conditions won out,” said Harry Tchilinguirian, head of oil research at Onyx Commodities. “Opec+ showed it could not ignore the current macroeconomic economic realities centred on China and Europe, which point to weaker oil demand growth.”

Further delay may do little to bolster the market, having been anticipated by many traders. Global markets still face a glut next year even if the Opec+ alliance refrains from increasing supplies, the International Energy Agency in Paris estimates. Citigroup and JPMorgan see prices slipping into the US$60s in 2025.

The Opec+ move is “modestly positive”, said Giovanni Staunovo, an analyst at UBS Group in Zurich. The market will focus instead on Iran’s response to Israel’s attacks and the outcome of US elections, he said.  – Business Times –