A view of the Organization of the Petroleum Exporting Countries (OPEC) logo during the United Nations climate change conference COP29 in Baku, Azerbaijan, November 13, 2024.
Maxim Shemetov | Reuters
The OPEC+ alliance of oil producers has postponed several formal and voluntary crude oil production cuts until 2026 due to a tepid global demand outlook, according to representative sources and internal documents.
The sources could only speak on condition of anonymity due to the sensitive nature of the negotiations.
Under its formal output strategy, the broader OPEC+ alliance will now limit its total output to 39.725 million barrels per day until December 31, 2026, compared with previously applying the quota only for all of 2025.
The eight OPEC+ members will now extend voluntary production cuts of 2.2 million barrels per day into the first quarter and will begin gradually increasing production between April and September 2026. barrel production reduction plan. The latter’s production decline was previously expected to last only until 2025.
While these production cuts and ongoing conflict threaten the hydrocarbon-rich Middle East, global oil prices have remained depressed for much of this year, weighed down by a tepid demand outlook. At 1:31 pm London time, the Ice Brent contract expiring in February and the front-month Nymex WTI futures in January were unchanged from Wednesday’s closing price.
President-elect Donald Trump’s impending return to the White House has heightened geopolitical uncertainty.
“While OPEC+’s decision today to postpone the lifting of some oil production cuts until April 2025 buys the organization some time, the backdrop of weak global oil demand means it could easily find itself back in a similar situation three months later. situation.
“We believe that oil price fundamentals remain weak and price risks are biased to the downside.”
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