Oil prices jumped on Tuesday after several media reported a possible further postponement of the OPEC+ alliance's production increase to take into account a risk of market imbalance in 2025. The price of a barrel of Brent from the North Sea for delivery in February gained 2.52%, to close at $73.62. A barrel of American West Texas Intermediate (WTI) due in January gained 2.70%, to $69.94.
According to the Bloomberg agency, the member countries of the Organization of the Petroleum Exporting Countries (OPEC) and their allies in the OPEC+ agreement are moving towards a further shift in the timetable for accelerating their production. After having already postponed the start of the increase from October to December, then to January, the cartel is preparing to push it back to the beginning of April. “It looks like we're going to have an agreement that will take us until the end of the quarter”the first of 2025, commented Phil Flynn, of Price Futures Group, “and that clearly supported the market.”
Gloomy outlook for 2025
The timetable provides for the eight member countries responsible for unilateral reductions totaling 2.2 million barrels per day to gradually increase their volume over one year to return to their previous production level. Representatives of member states are due to meet online on Thursday, after allowing themselves a four-day delay from the date initially chosen, a decision that several analysts had seen as a sign of dissension within the group. This meeting comes against a backdrop of prices lacking support and a gloomy outlook for 2025.
According to the International Energy Agency (IEA), “even if OPEC+ production cuts were maintained, global supply would exceed demand by more than a million barrels per day next year”the organization said in its latest monthly report. For Phil Flynn, the prices of black gold were also stimulated by what appear to be breaches of the ceasefire in Lebanon, namely Israeli air strikes and mortar fire from the pro-Iranian Hezbollah movement. After passing above the symbolic threshold of 70 dollars per barrel, WTI nevertheless fell slightly below before the close. “There was a little bit of skepticism and some profit taking”according to Phil Flynn. The operators “want to see US stock numbers” oil, the status of which will be published on Wednesday, “before you start purchasing. But if we manage to close above $70, we will be able to start going back up.”
