Bankinter: OPEC is to delay the planned production increase of 180,000 barrels per day by three months. This is positive, if not unexpected, news for oil. The current OPEC cuts amount to 5.86 million barrels of oil per day (bpd), which corresponds to around 5.7% of world oil demand. Within the aforementioned cuts, 3.66M bpd will be extended until the end of 2025 and the remaining 2.2M bpd will start to be reduced in March 2025 (from December 2024 previously) gradually until September 2026. Therefore, it should have started cutting less, but has chosen to wait. The key is what will happen in the coming months, as an even longer period of production cuts could be accepted in a context of weak oil prices. We reiterate our negative view on oil, affected by China’s economic slowdown. Saudi Aramco has just announced the reduction of official prices, January 2025, to Asia to the lowest level since 2021. Other factors also have an impact, such as global overproduction, especially in the US, more efficient economies (less and less oil is needed), and the rise of clean energy.
OPEC to delay planned 180,000 bpd production hike by three months due to China’s economic slowdown
