Oil prices have been down due to weaker than expected demand from China as well as increased production from countries such as Brazil and Argentina that are not in OPEC+.
The OPEC+ alliance of oil exporting countries are meeting to discuss whether to put off plans to pump more crude amid sluggish demand and competing production from non-allied countries – factors that could keep oil prices stagnant into next year.
Key beneficiaries of any unchanged policy would be motorists, who have seen prices fall in recent months although European drivers see far smaller fluctuations than the US because taxes make up a much bigger chunk of the cost.
OPEC+, which includes Saudi Arabia as the dominant member of the OPEC producers’ cartel, and Russia as the leading non-OPEC member in the 23-country alliance, is holding an online meeting over whether to put off production increases that are scheduled to take effect on 1 January.
Eight OPEC+ members planned to start increasing production from that date by gradually restoring 2.2 million barrels per day in previous production cuts. Analysts now say the group could postpone production increases for another three months as it monitors demand.
Oil prices have been down due to weaker than expected demand from China as well as increased production from countries such as Brazil and Argentina that aren’t in OPEC+. Oil analysts have been busy reducing their estimates for demand for next year, meaning that OPEC+ could remain in a bind well into 2025.
The Saudis need oil revenue to carry out Crown Prince Mohammed Bin Salman’s ambitious plans to diversify his country’s economy, including the development of Neom, a $500bn (€475bn) futuristic city in the desert.
For Russia, oil export revenues are a key pillar of state finances and funding for the war against Ukraine. Holding back production risks losing market share. Yet increasing production and sales could lower prices in a global economy that analysts say is already well supplied with oil.
OPEC has cut its forecast for 2025 demand growth to 1.54 million barrels per day, from 1.85 million barrels per day in July.
Analysts at Commerzbank foresee Brent prices averaging $75 per barrel in the first quarter of next year and $80 for the remaining three quarters.
