Bankinter | Brent is up 1.8% to near $75/b following OPEC’s decision this weekend to delay the expected oil production increase for December by another month. For reference, it is currently cutting 5.86 million barrels of oil per day (bpd), which corresponds to about 5.7% of world oil demand. Within the aforementioned cuts, 3.66M bpd will be extended until the end of 2025 and the remaining 2.2M bpd will be extended until January 2025 (from December 2024 previously). Therefore, it should have started cutting less, but opted to wait. The question is whether it will make further delays, a scenario to which we give a high probability in a context of moderating prices. In our view, this trend will continue in the coming years. The main reason is the economic slowdown in China. But other factors are also having an impact, such as global overproduction, especially in the US, more efficient economies (less and less oil is needed), and the rise of clean energy. All this is further exacerbated by volatility stemming from geopolitical tension stemming from two key oil regions: the Middle East and Ukraine. It is true that greater tension could raise prices, but it would be temporary and these wars also have a direct impact in terms of global economic growth.
OPEC delays 180,000 bpd production increase by one month
