Sources say OPEC+ is close to an agreement on delaying the increase in oil production.
Two sources within the group said on Thursday that OPEC+ was close to reaching an agreement with regards to delaying a planned increase in oil production for October after crude prices fell to their lowest level in nine months.
Oil prices are falling, along with other asset categories. This is due to concerns over a weakening global economy as well as soft data coming from China, which is the world's largest oil importer.
One of the sources stated that "it is likely the countries will act to balance the market, by delaying the rise," According to the second source, OPEC+ is "almost" there in terms of reaching an agreement.
Brent crude, the benchmark oil price, rose to $73 per barrel on Thursday. However it remained close to its lowest levels since December.
The increase in production was planned for 180,000 barrels a daily, which is part of the 5.86 million bpd that OPEC+ has held back. This represents about 5.7% global demand.
Last week, OPEC+ (the Organization of the Petroleum Exporting Countries plus its allies, led by Russia), was to increase the price of oil.
The group is concerned about the fragile oil market sentiment, mainly due to the uncertainty surrounding the prospects of increased supply from OPEC+, and the end of the dispute that has halted Libyan exports. This, combined with a weakened demand outlook, has also raised concerns.
HSBC stated in a recent report that the market could be negatively affected by any decision made by OPEC+.
"An increase in production will tip the market to a significant surplus by the first quarter of 2025." Holding off could be interpreted by some as OPEC's belated admission that the oil demand is low.
Helima Croft, an analyst at RBC Capital, said in a recent note that it might be prudent for OPEC+ not to return extra barrels until December.
The OPEC+ member countries agreed in June that they would start unwinding their most recent output cuts - a reduction of 2.2 millions bpd from eight countries – from October 2024 until September 2025.
The 3.66 million bpd remaining reductions, which were agreed earlier, will continue until 2025.
OPEC+ has agreed to reduce output in order to stabilize market prices, despite an uncertain demand outlook and a rising supply outside the group.
(source: Reuters)
