By Ahmad Ghaddar, Olesya Astakhova and Alex Lawler
In a move to support falling crude oil prices, OPEC+ has agreed to postpone a planned oil output increase for October and November. This decision comes as oil prices hit their lowest point in nine months, reflecting concerns about a weak global economy and soft data from China, the world's largest oil importer.
The news of the two-month delay in the output increase has already had an impact on oil prices, pushing them up by over $1 per barrel. Currently, futures are trading at $73.72 a barrel, rebounding from their recent lows.
OPEC+ had initially planned to increase output by 180,000 barrels per day (bpd), a small fraction of the 5.86 million bpd that they are currently holding back to support the market. This decision was made due to uncertainties surrounding demand and increasing supply from non-OPEC+ countries.
While OPEC+ was previously set to proceed with the output increase, concerns over fragile market sentiment and a weakening demand outlook have prompted a reevaluation of the decision. The group will convene on December 1 to discuss future policy, with a meeting of top ministers scheduled for October 2.
Recent developments in Libya, a key OPEC producer, have also played a role in supporting oil prices. A dispute over control of the central bank has led to a significant loss of production, providing some support for prices. However, news of a possible resolution to the conflict caused prices to slump by about 5% on Tuesday.
Analysts suggest that it may be wise for OPEC+ to wait until December before considering any additional output increases. The group had initially agreed in June to start unwinding the most recent layer of output cuts in October 2024, with further cuts remaining in place until the end of 2025.
In conclusion, the decision by OPEC+ to delay the planned oil output increase reflects ongoing concerns about global demand and market uncertainty. For investors, this development could impact oil prices and related sectors, highlighting the importance of staying informed and adapting investment strategies accordingly.