Economic Update: OPEC+ Supply Dynamics
On Monday, Russian Deputy Prime Minister Alexander Novak indicated that the OPEC+ alliance of oil producers is not currently evaluating the planned monthly production increases set to commence in April. This statement reflects cautious sentiment among officials regarding market conditions.
According to sources within OPEC+, there has been no formal discussion regarding the supply increases. Some representatives believe that the oil market may be in a position to assimilate additional supplies due to tightening sanctions and rising demand from China. However, they caution that it is premature to make definitive decisions.
Market analysts, including those at Morgan Stanley, anticipate OPEC+ may maintain its current production levels rather than increase output.
OPEC+ has implemented a series of production cuts totaling 5.85 million barrels per day, which represents approximately 5.7% of total global supply, since 2022. This strategy aimed to stabilize prices amidst fluctuating demand and oversupply pressures.
In December, OPEC+ extended its current production cuts through the first quarter of 2025, thereby postponing the previously planned increases until April. This extension is part of ongoing adjustments made in response to weak demand and the rising production levels from outside the coalition.
Per the outlined plan, the group is expected to reduce the latest cutback of 2.2 million barrels per day, initiating a gradual increase in production from the UAE starting in April, with a scheduled monthly rise of 138,000 barrels per day.
These incremental increases are projected to continue until September 2026. Historical practices suggest that a final decision regarding these adjustments is likely to be made in early March.
For ongoing updates, subscribe to our channel on Tilekram
