The Organization of the Petroleum Exporting Countries and its external partners, the cartel known as OPEC+, have decided not to increase oil production in October as planned, and will wait another two months to begin the process of increasing supply. The decline in oil prices in recent months has forced the cartel to reverse its plan. After a day of speculation that OPEC+ would make this decision, several delegates confirmed to the agencies that this resolution had already been accepted, in the absence of an official publication from the organization. Oil prices reacted to the news, with increases of more than 2% that led to a barrel Brent to recover the $74.
Since the beginning of July, the price of oil has entered a dynamic that has ended up calling into question OPEC’s ability to increase oil supply, at a time when demand is lower than expected and prices are suffering. Since the highs of the year that the European barrel reached in July, the decline exceeds 15% and has led to the Brent to erase all the increases I had suffered since the first day of the exercise.
As oil prices continue to fall, there are voices that doubt the increase in supply announced by the cartel of producers. BP, for example, through its chief economist, was one of the last voices to point out this possibility, stressing at the end of August that OPEC+ would not want to generate “instability in the market” and that, therefore, it would delay the moment when crude oil production would begin to increase. OPEC+’s intention was to start increasing supply by around 200,000 barrels per day next October.to gradually open the taps until it recovers 2 million barrels of production per day, part of the supply that the cartel has sacrificed in recent years to try to support crude oil prices.
From the first moment OPEC+ announced its intention to gradually open the taps, in June, many analysts were skeptical about the organization’s plan. 2024 has been a year in which oil demand has suffered a significant slowdown, punished by the economic slowdown in the United States, but especially by the decline in consumption in China, which continues to face a crisis that the government is not. finish solving. The Energy Information Agency updated its market forecasts in July and began to envisage a market with excess supply. Since then, the price of a barrel has continued to fall, and OPEC has been forced to recognize that the decision to increase production could be canceled, or delayed.
Ultimately, it seems that they chose the latter solution, and that They will wait at least two more monthsalthough it cannot be ruled out, always with the price of crude oil, that the Organization will be forced to cancel this process in the coming months. Until December, the cartel will have time to carefully analyze the evolution of events on the market in order to make a more informed decision.
