On November 3, 2024, OPEC+ made an expected but no less important decision: to extend for an additional month the voluntary production reductions of eight of its members, including Saudi Arabia and Russia. 2.2 million barrels per day are affected, which aims to stabilize prices in a context of uncertain global demand.
Why does OPEC+ choose to limit production?
Current fluctuations in energy prices, particularly crude oil, reflect a series of economic and geopolitical tensions. Global demand remains weak due to economic uncertainty in China, which absorbs a major share of global crude exports, and concerns in the United States, the world's largest consumer. In response, OPEC+ decided to continue restricting supply to prevent prices from falling further. This choice of deferred action, initiated for the first time in September 2024, shows OPEC+'s desire to control market variables in order to preserve the profitability of its members' exports.
| Members involved | Daily reduction (barrels) | Extension date |
|---|---|---|
| Saudi Arabia | 500 000 | Until the end of December 2024 |
| Russia | 300 000 | Until the end of December 2024 |
| Irak | 200 000 | Until the end of December 2024 |
| United Arab Emirates | 150 000 | Until the end of December 2024 |
| Kuwait | 100 000 | Until the end of December 2024 |
| Kazakhstan | 80 000 | Until the end of December 2024 |
| Algeria | 70 000 | Until the end of December 2024 |
| Oman | 100 000 | Until the end of December 2024 |
What consequences for oil prices and the global energy sector?
The extension of this production limitation directly influences crude oil prices on international markets. With prices remaining around 72 to 73 USD for Brent and slightly lower for WTI, the effects of the reduction should, in the short term, stabilize these levels or even lead to a slight increase.
This decision risks affecting the price of fuel at the pump, because the increase in crude costs is directly reflected in the costs of refined products. Consumers could therefore see an increase in fuel prices in the weeks following this extension, depending on market reaction and seasonal demand. In the long term, withholding production could also encourage investments in alternative energy and energy efficiency, a trend already underway in several economies.
Consequences for global energy policies
For importing countries, this extension of OPEC+ reductions could also influence their energy strategies. As energy costs rise, governments are encouraged to explore alternatives to reduce their dependence on imported oil. Tensions on the global market are pushing more and more countries to accelerate their energy transition, although oil remains an essential strategic resource for the moment. Current fluctuations are a reminder of the volatility inherent in global energy markets, where OPEC+ production decisions play a major role.
| Influencing factors | Description |
|---|---|
| Global economic uncertainty | Slowdown in China and uncertain outlook in the United States. |
| OPEC+ production reduction | 2.2 million barrels per day kept off the market by OPEC+ members. |
| Increase in production costs | Rising production costs, particularly for shale oil operators. |
| Energy transition | Increased pressure to invest in renewable energy and energy efficiency technologies. |
Financial markets reacted with measured caution to this extension announcement, indicating a certain anticipation of the decision by investors. Industry observers believe that the planned OPEC+ meeting in early December in Vienna could provide new guidance for the first quarter of 2025. Maintaining this reduction policy could, however, create tensions if demand were to increase unexpectedly.
