The Organisation of the Petroleum Exporting Countries (OPEC) and its allies are likely to extend their voluntary oil production cuts to avoid a price drop in an oversupplied market. The virtual OPEC+ meeting, rescheduled to Thursday after internal discord delayed it, could see the group pushing back planned production increases to the end of Q1 2025.
OPEC+ nations, including Saudi Arabia and Russia, withhold 6 million barrels of oil per day, with 2.2 million barrels marked for potential production increases. Analysts predict the group will opt to delay these increases to maintain price stability in the face of global demand concerns.
However, the International Energy Agency (IEA) warned that global supply could exceed demand by over 1 million barrels per day next year even with the cuts. This is compounded by expectations of increased US output under President-elect Donald Trump and China’s weakening economic demand.
Despite the expected extension, tensions within OPEC+ are palpable. Some nations, including Kazakhstan and the UAE, are pushing to boost production to utilise their spare capacity. Earlier this year, Iraq and Kazakhstan faced criticism for exceeding their quotas, underscoring the difficulty of enforcing production limits.
Saudi Arabia, the de facto leader of OPEC, remains adamant about maintaining high oil prices to fund its Vision 2030 economic diversification programme.
While analysts largely agree that Saudi Arabia and Russia are likely to sway the group towards a unified decision, dissenting voices within OPEC+ highlight the fragile nature of its alliances. A failure to extend the cuts could drive oil prices down, threatening the economic strategies of key members.
As the virtual meeting convenes, the global energy market watches closely, awaiting clarity on the cartel’s next move in balancing supply and demand.
