The OPEC Secretariat announced over the weekend that the voluntary production cuts of eight OPEC+ countries would be maintained in full until the end of the year. In addition, the countries have committed to strict implementation of the promised production cuts, including compensatory cuts to offset previous overproduction, Commerzbank’s commodity analyst Carsten Fritsch notes.

OPEC+ productions cut to be maintained

“It had already been hinted last week that the gradual increase in production planned for next month would be postponed again. Therefore, this was no longer a big surprise. An increase in supply in December would have risked triggering a decline in oil prices, even if the monthly production increase of 180,000 barrels per day had been small.”

“The signal alone and the prospect of further production increases in the following months would probably have been enough to put oil prices under pressure. The next regular OPEC+ meeting will take place on 1 December, when a decision is to be taken on oil production in the first half of 2025. Given weakening demand and rising oil supply outside OPEC+, there is no scope for OPEC+ to expand production without risking oversupply and a price decline.”

“Therefore, OPEC+ is unlikely to have much of a choice in a month's time other than to postpone the production increase again. Yesterday, the OPEC Secretary General was very optimistic about oil demand. However, if the demand outlook is indeed so positive, there would have been no need to postpone the planned gradual withdrawal of the voluntary production cuts.”