OPEC+ Decides to Postpone Increase in Oil Production
The OPEC+ alliance has decided to postpone oil production increases that were scheduled to begin next month due to a slowdown in global oil demand and production increases from non-OPEC+ countries. This decision was made during an online meeting and aims to provide additional support to the oil market until 2025.
OPEC+ is an alliance of 23 countries led by Saudi Arabia and Russia. The alliance pumps nearly half of the world's oil supply and has decided to delay production increases, originally planned to start on January 1, by three months. The proposed plan included a gradual restoration of the previous production cuts of 2.2 million barrels per day by eight OPEC+ members. However, this increase plan has been suspended due to rising external production and stagnant demand.
Effects of Oil on OPEC Countries' Economies In the global oil market, particularly with weak demand expected from China, prices are remaining stable. Saudi Arabia needs oil revenues to finance economic transformation projects, such as the $500 billion desert city Neom led by Crown Prince Mohammed Bin Salman, while for Russia, oil export revenues support state financing and cover the costs of the war with Ukraine.
OPEC has lowered its demand growth forecast for 2025 to 1.54 million barrels per day. Commerzbank analysts expect Brent crude oil prices to average $75 in the first quarter of next year and $80 in the remaining quarters. In this context, OPEC+'s decision to maintain production cuts emerges as a significant economic strategy.
The OPEC+ alliance is currently implementing a daily production restriction of 5.86 million barrels, equivalent to 5.7% of global oil production this year. These restrictions are known to have been gradually implemented to provide market support since 2022. The planned increase of 180,000 barrels per day has been postponed due to falling prices since January.
Additionally, sources have reported that the daily increase of 300,000 barrels agreed upon for the United Arab Emirates (UAE) in June, scheduled to start in January 2025, was also discussed during the meeting, with the UAE known to wish to proceed with this increase.
Current Situation of Oil Prices Brent crude started the day flat at $72.2 and began to fluctuate around the time of the OPEC+ meeting. In recent hours, Brent fell to $71.6 before quickly rising to $72.4.
Continuing the overall downward trend, Brent crude is maintaining the $70 support level this year while struggling to find upward momentum.
WTI futures are also oscillating in the $67-70 range this week, remaining above the key support level around $66.