Energy·OilOil prices could fall even further as key OPEC+ members agree on duction hike to gain more market By Pol-Malo Le BrisBy AFPBy Pol-Malo Le BrisBy AFP An oil drum with featuring the logo of the Organization of the Petroleum Exporting Countries at the COP29 climate conference in Baku, Azerbaijan, on Nov.
13, 2024.Andrey Rudakov—Bloomberg via Getty ImagesEight key members of the OPEC+ alliance said Sunday they have agreed to again boost oil duction, in a strategy analysts saw as a bid to gain a bigger market of crude sales.
Oil ministers in the V8 grouping — comprising Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman — decided to increase duction by 137,000 barrels a day (bpd) from next month, they said in a statement.
Those countries had already increased duction by 2.2 million bpd in recent months.
In their statement issued after an online meeting on Sunday, they said that the new incoming cycle could see up to an extra 1.65 million bpd eventually coming onto the market.
“OPEC+ caught the market off guard today — instead of pausing, the group signalled ambition with a duction hike.
The barrels may be small, but the message is big,” said Jorge Leon, an analyst at Rystad Energy. “OPEC+ is prioritising market even if it risks softer prices,” he said.
Oil prices are currently hovering around $65-70 per barrel, having tumbled 12 percent this year as global ducers outside OPEC+ ramp up supply and tariffs curb demand.
OPEC+ — which comprises the 12-nation Organization of the Petroleum Exporting Countries (OPEC) and its allies — had in recent years seen through several output cuts amounting to a total of almost six million bpd.
Analysts, up to a week ago, had been saying the V8 was ly to maintain their current output levels in October.
By raising them, even by a relatively modest 137,000 bpd, the V8 instead indicated that OPEC+ was willing to weather prices falling below $60 a barrel if it meant regaining market .
Leon said: “In reality, the actual duction boost will be far smaller, given capacity limits and the compensation mechanism.
But perception often matters more than physical barrels.” Still, he said, “the move raises questions unity: countries Russia depend on high prices to fund their war machine, while others are willing to test lower prices for market ”.
Geopolitical factors The real test for OPEC+ will be the last three months of this year, a period when seasonal demand tends to be lower, he said.
Oil specialists are keeping a close eye on Moscow’s war in Ukraine as well as developments regarding US-Russia relations — geopolitical factors that could impact oil prices.
US President Donald Trump, whose efforts to mediate between Russia and Ukraine have failed to duce a breakthrough, has recently targeted Russian oil and those who buy it.
In August, he imposed higher tariffs on India as punishment for its purchases of Russian oil.
In a meeting with allies of Ukraine who gathered in Paris on Thursday, Trump told leaders via a conference that he was frustrated with EU purchases of Russian oil, particularly by Hungary and Slovakia.
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