Oil traders are uncertain about OPEC+’s next steps regarding oil production. There is speculation about whether the cartel will proceed with a planned increase in December. OPEC+ has discussed boosting production, but its approach of adjusting output based on market conditions is causing hesitation among traders.
A recent Bloomberg poll revealed that 16 out of 30 traders believe OPEC+ will likely postpone the increase. This is largely due to Saudi Arabia’s dominant role, with Energy Minister Prince Abdulaziz bin Salman holding significant influence. Saudi Arabia has implemented substantial production cuts and often compensates for other OPEC members who do not meet their quotas. The Kingdom is also known for persuading other members to accept tough production plans.
OPEC+ faces a challenging situation. It must balance the revenue goals of individual members, maintain compliance, and unify its demand outlook. The latest OPEC Monthly Oil Market Report lowered the demand growth forecast for 2024 to 1.9 million barrels per day (bpd). While this reflects a post-COVID high, it is below recent peaks. Additionally, the forecast for 2025 was reduced by another 102,000 bpd to 1.6 million bpd. In contrast, China increased its oil imports by 16% month over month in August, yet this figure remains below August 2023 levels, complicating the demand picture and keeping the oil market on alert.
At this point, traders remain divided, and OPEC+ has several weeks to decide whether to increase production, delay it, or implement further cuts. Attention turns to November 12, when OPEC will release its next Monthly Oil Market Report (MOMR) and Saudi Arabia will announce its Official Selling Prices (OSP), both of which could significantly influence market trends.
As of Wednesday morning, oil prices showed some recovery after an early week slump, with West Texas Intermediate (WTI) rising by 1.46% to $68.19 and Brent crude climbing 1.49% to $72.18.
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