With the global economy going through turmoil, which has resulted in a nine-month low in crude prices, OPEC+ has agreed to postpone the planned oil production increases for October and November, the group announced on Thursday. They also indicated the possibility of further delaying or reversing the hikes if necessary.
The prices of oil have been falling due to a weak economy and soft data from China, which is the biggest importer of oil.
Opec+, which is made up of the Organisation of the Petroleum Exporting Countries and has eight members and allies led by Russia, had been scheduled to raise production from October in a virtual meeting held on Thursday.
“But accessing the current situation, the eight participating countries have agreed to extend their additional voluntary production cuts of 2.2 million barrels per day for two months until the end of November 2024,” Opec said in a statement.
The announcement boosted oil prices by more than $1 per barrel, with Brent futures surpassing $74 before trimming gains. On Wednesday, prices had dropped to their lowest level of the year.
OPEC+’s planned October hike was for 180,000 bpd, a fraction of the 5.86 million bpd of output it is holding back, equal to about 5.7% of global demand, to support the market due to uncertainty about demand and rising supply outside the group.
Last week, OPEC+ was prepared to move forward with the production increase. However, concerns within the group grew due to fragile market sentiment driven by the potential for increased supply from OPEC+ and the resolution of a dispute halting Libyan exports, along with a weakening demand outlook, sources said.
