The OPEC+ group, made up of major oil-producing countries, is set to hold a crucial meeting on December 1 to decide the future of planned production cuts. Initially planned in Vienna, the meeting will ultimately take place online, reflecting internal disagreements over compliance with production quotas and geopolitical tensions.
At the center of the discussions is the decision to maintain or modify voluntary production cuts of 2.2 million barrels per day (bpd), currently extended until January. Analysts anticipate a possible postponement or adjustment of these reductions in the face of uncertain global demand, partly due to a slowdown in economic growth in China, the world’s second largest oil consumer.
Demand Forecasts and Strategic Divergences
Estimates of global oil demand vary. While OPEC remains optimistic with a projected increase of 1.82 million b/d in 2024, the International Energy Agency (IEA) forecasts a more modest increase of 920,000 b/d. This difference highlights continued uncertainties about the global economic recovery, exacerbated by inflationary pressures and geopolitical challenges.
Current prices, with Brent quoted at $74.59 per barrel on November 26, remain below the threshold considered necessary to encourage the group to increase production. Some analysts predict that maintaining current quotas or even additional cuts may be necessary to support prices.
Internal Challenges and Member Compliance
Several members, including Iraq, Russia and Kazakhstan, exceeded their quotas in 2024 and must compensate for these excesses through additional reductions in 2025. Internal tensions are amplified by the position of the United Arab Emirates, which obtained an increase of 300,000 b/d of their quota for 2024, which could increase the group’s overall supply.
One of the scenarios considered by analysts would be an extension of the current quotas until the second quarter of 2025. Such a measure would limit the impact of refinery maintenance scheduled for the end of winter, a traditionally weak period for the request.
Geopolitical factors and external uncertainties
Geopolitics also plays a key role in future decisions. The recent truce between Israel and Hezbollah could ease tensions in the Middle East, but risks remain in Ukraine and over potential sanctions against Iran. The latter, exempt from OPEC+ quotas, has increased its production by more than 600,000 b/d since 2022, posing an additional challenge to the coordination of the group.
Furthermore, the arrival of the Trump administration in January 2025 could transform global oil dynamics, with a possible increase in American production and a review of international sanctions. This could intensify competition for market share, increasing pressure on OPEC+ to maintain its current strategy or consider further cuts.
