OPEC+ efforts to manage oil supply are causing significant price volatility and making it harder for investors to plan new production, according to Claudio Descalzi, CEO of Italy’s energy giant Eni.
Descalzi’s comments, made on Monday, come after OPEC+ decided to delay its planned increase in oil supply. The group, which has been voluntarily cutting production to support prices, had intended to start easing some of those cuts in December 2024. However, OPEC announced on Sunday that it would push back this increase by a month, now scheduled for January 2025.
The announcement immediately impacted the oil market, with prices jumping by 3% on Monday. West Texas Intermediate (WTI) crude surged back above $70 per barrel after dipping below that threshold just days earlier.
Originally, OPEC+ had planned to bring back 180,000 barrels per day (bpd) starting in December, but this decision was contingent on the state of the market. If prices were high enough, the group would restore supply. But with prices still low, the increase has been delayed.
According to ING’s commodity analysts, Warren Patterson and Ewa Manthey, while the delay until January does not dramatically shift market fundamentals, it could force investors to rethink their expectations of OPEC+’s strategy.
Although OPEC and its partners, including Russia and Kazakhstan, continue to argue that their policy aims to stabilize the market, Descalzi warned that the constant adjustments to production levels are undermining confidence in future investment.
“When OPEC announces production cuts or increases, prices immediately react. The uncertainty over whether production will rise or fall is harmful,” Descalzi said at the ADIPEC energy conference in Abu Dhabi. “This kind of volatility is not good for long-term investment in oil and gas.”
Descalzi emphasized that while the world’s energy needs are growing, the unpredictable nature of OPEC+’s decisions makes it more difficult to secure funding for new projects.
Related Topics:
- OPEC Oil Production Fell by 600,000 Bpd in September Due to Libyan Blockade
- Energy and OPEC Take Center Stage in the US Election Campaign
- OPEC Daily Basket Price Reached $77.66 Per Barrel on Friday