Oil, doubts on Opec+ production increase after summit postponement
The group will meet on Thursday 5 December instead of Sunday 1, officially due to the overlap of another event. But the market does not trust: difficult negotiations are likely on the plan to withdraw the cuts
2' min read
2' min read
The resumption of Opec+ oil production seems to be moving further away in time. The next summit, where the coalition is expected to update plans to reopen the taps, has been postponed by four days, from Sunday 1 to Thursday 5 December. And the suspicion among observers is that the choice was at least partly dictated by the need to prolong the negotiations, in view of decisions that are not expected to be easy.
Unanimous consent by statute
The group, which by statute is obliged to unanimous consent on production policies, has already twice postponed the plan for the gradual return of 2.2 million barrels per day of crude oil to the market, part of the maxi-cuts it has introduced on several occasions since 2022: the start, originally scheduled for October, was first moved to December and then to January 2025.
The choice is now whether to postpone further, or to face the consequences of an almost inevitable fall in oil prices. In fact, there is an oversupply on the market, due to a demand that has been rather weak for some time, a production boom in countries outside Opec+ (especially the US, Guyana and Canada), but also the lack of discipline of some coalition members on which the Saudis are perhaps no longer willing to turn a blind eye.
Riyadh disproportionately bears the brunt of the production cuts, while others - notably Russia, Iraq, and Kazakhstan - have not only failed to make good on their promises, but are not even fully complying with their commitment to catch up on arrears.
It is probably no coincidence that this week there has been a tourbillon of talks between officials from these four countries, officially reported by the governments themselves. Others may have taken place in confidence.
