Oil: Opec+ postpones withdrawal of cuts, price does not rise

Contrordination. After the fall in oil prices, which have dropped to their lowest level in over a year, Opec+ has decided to postpone the reopening of the taps by two months. The gradual reduction in production cuts will therefore not begin in October, when a first tranche of 180,000 barrels per day was scheduled to return to the market, but only in December. Barring further second thoughts, of course, which cannot be ruled out. The group again emphasised that it reserves the 'flexibility to stop or reverse the adjustment as necessary'.

The change of course was in the air. The tone of the rumours carried by international news agencies had already changed, when an official statement, also published on the website of the Organisation of Crude Oil Exporters, put an end to the inferences. Perhaps this is also why the reaction in the market was decidedly lukewarm.

After an immediate leap of more than 2%, Brent crude prices sank again within a couple of hours and by the end of the session on Thursday 5 they were almost unchanged from the day before: around USD 72.50 per barrel, close to 14-month lows. The Wti even fell into negative territory, retreating below $69.

It is true that from the outset 'Opec+ has always said it would adjust its policies according to market conditions', as Amrita Sen of Energy Aspects recalls. Rumours, however - driven by the oil producers' group - had long reassured the market: anonymous delegates ruled out any intention to change the plan to withdraw cuts in the short term.

The 'exit strategy' - which envisaged production increases of 180,000 bg per month from October and 210,000 bg per month in 2025, ending in September - had been planned in detail, discussed and unanimously approved by the Opec+ countries at a summit last June. Barely three months have passed since then, but the mood in the markets has changed.