OPEC+ Delays Oil Production Increases Amid Weak Demand and Price Pressures

The OPEC+ alliance announced its decision to postpone scheduled oil production increases on Thursday, December 5th, due to weaker-than-expected global demand and competition from non-member producers. Originally set to begin in January 2025, the incremental production hikes will now commence in April 2025 and extend through October 2026.

The alliance, led by Saudi Arabia and Russia, seeks to maintain crude oil prices amid declining demand from China and increased output from countries like Brazil and Argentina. Analysts project a subdued oil market, with Brent crude prices hovering around $72.57 per barrel and U.S. crude at $68.75—far below their mid-year highs of $80. The delay aims to stabilize prices while addressing the economic needs of key OPEC+ members, such as funding Saudi Arabia’s NeomCity project and supporting Russia’s wartime economy.

Current OPEC+ production cuts of 2.2 million barrels per day will remain in place through March 2025. Additionally, an existing voluntary reduction of 1.7 million barrels per day has been extended until the end of next year. This strategy reflects the group’s cautious approach, balancing market share retention with the risk of oversupply and further price drops.

Global oil markets remain uncertain, with analysts at Capital Economics suggesting the alliance could face similar challenges within three months. The delay provides temporary relief but underscores the difficulty of navigating a market where demand forecasts are continually revised downward. OPEC+ has already reduced its 2025 demand growth estimate to 1.54 million barrels per day, aligning with global trends.

Meanwhile, U.S. consumers benefit from falling gasoline prices, averaging $3.03 per gallon—the lowest since May 2021. However, President-elect Donald Trump’s pro-fossil-fuel agenda, including plans to boost U.S. oil production by three million barrels per day, could further complicate the market dynamics for OPEC+.

As OPEC+ manages these complexities, the alliance’s decisions will have significant implications for global energy markets and economic stability. The group remains committed to supporting oil prices while navigating geopolitical and economic uncertainties in the year ahead.