OPEC+ has agreed to further raise oil production from October while slowing the pace of increases compared with previous months due to an anticipated weakening of global demand.
Opec+ has been increasing production since April after years of cuts to support the oil market, but yesterday’s decision to further boost output came as a surprise amid a likely looming oil glut in the northern hemisphere winter months.
Eight members of Opec+ agreed yesterday in an online meeting to raise production from October by 137,000 barrels per day, it said in a statement, much lower than the monthly increases of about 555,000bpd for September and August and 411,000bpd in July and June.
The Sunday deal also means Opec+ has begun to unwind a second tranche of cuts of about 1.65 million bpd by eight members more than a year ahead of schedule. The group hasalready fully unwound the first tranche of 2.5m bpd since April, equivalent to about 2.4 per cent of global demand.
Opec+ said it retained options to accelerate, pause or reverse hikes at future meetings. It scheduled the next meeting of the eight countries for October 5.
The increases in output have led to a fall in oil prices of around 15 per cent so far this year, pushing oil companies’ profits to their lowest since the pandemic and triggering tens of thousands of job cuts.
Oil prices have not collapsed, however, trading at around $65 a barrel, supported by Western sanctions on Russia and Iran.
Opec+ had two layers of cuts before the Sunday deal – the 1.65m bpd cut by the eight members, and another 2m bpd cut by the whole group in place until the end of 2026.
Russia, meanwhile, is fully compliant with its Opec+ commitments, Russian Deputy Prime Minister Alexander Novak said yesterday.
The oil market is balanced, and the deal is being implemented on a very high level, Novak said, speaking on state TV after the group meeting.
“We agreed that we would monitor the market situation. We will have opportunities in the future, also meeting monthly, to make decisions in one or another direction depending on the state of the market”, he added.
“As far as Russia is concerned, we are fulfilling our obligations in full. Both in terms of compensation and in terms of increasing volumes that were agreed in previous periods.”
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