OPEC+ has decided to postpone by one month the increase in oil production which was planned for December, while the weakness of demand (in particular from China) and the increase in supply maintain pressure on the oil market.
OPEC+ is postponing the reopening of the floodgates in the face of falling prices. Several of its members, including Saudi Arabia and Russia, announced on Sunday an extension of their oil production cuts until the end of December.
The eight countries “agreed to extend their additional voluntary production reductions of 2.2 million barrels per day for another month,” the alliance said in a statement.
In addition to Riyadh and Moscow, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman are affected.
Uncertain demand
This decision aims to support prices, with American WTI and Brent hovering around $70 in the face of uncertain demand, far from the targeted threshold of 80 euros.
“This is the logical consequence of the persistent downward pressure on prices due to the gloomy outlook for demand in China and around the world,” commented Ipek Ozkardeskaya, analyst at Swissquote Bank, for AFP.
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The impact of the OPEC+ announcement should however be limited, she believes, while the group's “strategy of restrictions” is struggling to bear fruit. Because its 22 members, shaken by American competition, now control barely half of world crude oil production.
