OPEC+ Delays Production Hike Until April to Support Prices

OPEC+ will delay a planned production hike for the third straight month as part of efforts to support prices.

Eight OPEC+ members, which produce about half of the world’s crude oil, agreed at a Dec. 5 meeting to extend the voluntary output cuts of 2.2 million barrels per day until April. The reductions will then be phased in at a slower-than-expected pace and take another year to eliminate the production cuts by the end of 2026.

The OPEC+ countries are Saudi Arabia, Russia, Iraq, United Arab Emirates (UAE), Kuwait, Kazakhstan, Algeria, and Oman.

Countries originally agreed to initiate the first stage of production hikes in October, but weakening global demand and growing external output forced the world’s largest oil cartel to delay its plans.

Officials estimate that OPEC+ nations are holding back nearly 6 million barrels per day of production, representing nearly 6 percent of worldwide demand.

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Additionally, the UAE was permitted to increase daily output by 300,000 from April 2025 to September 2026.

OPEC’s announcement elicited little reaction in global energy markets.

West Texas Intermediate (WTI), the U.S. benchmark for oil prices, was flat and traded below $69 per barrel on the New York Mercantile Exchange.

Brent, the global benchmark for oil prices, stayed above $72 a barrel on London’s ICE Futures Europe.

Global oil prices have been volatile this year amid geopolitical tensions. According to Tom Essaye, founder and CEO of the Sevens Report, economic data and softening demand could be market drivers this month.

“Looking ahead, the outcome of today’s OPEC+ policy meeting will obviously have potential to impact the market, however, the risks remain skewed to the downside for oil given lingering economic uncertainties and demand risks,” Essaye said in a note emailed to The Epoch Times.

The Institute for Supply Management’s Services Purchasing Managers’ Index—an indicator of the prevailing direction of the sector—unexpectedly weakened in November for the first time since June.

Assessing the Impact on Global Energy Markets

ING commodities strategists say the decision will likely increase the worldwide oil market’s surplus in 2025.

OPEC will likely monitor the U.S. energy situation as President-elect Donald Trump has proposed expanding domestic production by shale drillers, repeating the common phrase “Drill, baby, drill.”

Industry experts have presented mixed views on whether this will expand U.S. production.

James Mick, managing director and senior portfolio manager at Tortoise, said prices will dictate supply.

“Prices will have the biggest impact on US production, driven by supply and demand,” Mick said in the company’s recent podcast. “It is likely we see more permits for drilling on federal lands and less regulations by reducing permitting times for pipelines, to name a few options.

“Yet we believe that U.S.-based firms will make decisions on whether to drill on economics, not rhetoric from the president.”

The president-elect’s proposal to stimulate the sale of oil and gas leases could further fuel the United States’ record daily production, says Scott Smith, chief investment officer at Viewpoint Investment Partners.

“In addition to the pro-growth stance towards domestic oil production, productivity gains are also helping to bolster the outlook for the industry,” he said in a note.

“Higher well productivity is propelling growth in the industry, with estimations that oil production in the U.S. will grow by 600k barrels per day next year, which is 50% higher than in 2024.”

The United States currently produces more than 13 million barrels per day (bpd).

However, while there might be concerns over losing market share, some members may prefer to keep prices elevated, according to Phil Flynn, an energy strategist at The PRICE Futures Group.

“The Saudis must believe that demand will exceed current damped down expectations. They must expect that this demand increase will allow them to profit from a period of sustained higher prices for longer.”

Producers could also be waiting for consumption to grow for the world’s largest petroleum importer. Whether China will renew its fierce appetite for crude remains to be seen.

“The recent downturn in China has been even more acute than expected, with oil demand in July declining year‑on‑year for a fourth consecutive month,” IEA analysts said in a report.

“China has been the cornerstone of the growth in global oil demand so far this century. Dynamic factory activity, massive infrastructure investments and rising prosperity across a population of over 1 billion people driving what has, at times, felt like an inexorable expansion in oil consumption.”

Growth expectations for the rest of the world are also subdued.

OPEC said that world oil demand would total 1.54 million bpd in 2025, a downgrade from 1.64 million bpd.

Likewise, the IEA anticipates global crude consumption will rise by 950,000 bpd next year, down more than 2 percent from 2.1 million bpd registered in 2023.

“Non-OECD countries drive almost all global oil consumption growth in our forecast. Much of this growth is in Asia, where India is now the leading source of global oil demand growth in our forecast,” the EIA said in its latest Short-Term Energy Outlook report.

“We expect consumption of liquid fuels in India to increase by 0.3 million b/d in both 2024 and 2025, driven by rising demand for transportation fuels.”

Gasoline stockpiles climbed by 2.362 million barrels. Distillate supplies surged by 3.83 million barrels, while heating oil inventories edged up by 242,000 barrels.