OPEC+ Delays October Oil Output Increase; November Impact Looms

OPEC+ Confirms Delay in Oil Output Increase

OPEC+ has agreed to delay a planned oil output increase originally scheduled for October and November as crude prices sink to their lowest figures in nine months, according to three anonymous sources linked to the producers' group. The dip in oil prices has been influenced by a wider drop across asset markets driven by concerns over a sluggish global economy and disappointing economic indicators from China, which is recognized as the world's largest oil importer. As a result of this news, oil prices experienced a modest uplift of over $1, with Brent futures reaching $73.72 per barrel as of 1408 GMT.

Impact of the Delay on Global Oil Markets

• This planned increase was intended to add 180,000 barrels per day, contributing to a significant output control of 5.86 million bpd held back by OPEC+, which represents approximately 5.7% of global demand.
• Prior to this decision, OPEC+, made up of the Organization of the Petroleum Exporting Countries alongside allies like Russia, was poised to move forward with the output increase.
• Current fragile market sentiment reflects unease regarding potential oversupply resulting from OPEC+ amidst a weakening demand outlook.
• Analysts such as those from HSBC have suggested that any decisions by OPEC+ could be received poorly by the market, stressing the need for prudence.

Future Outlook for OPEC+

RBC Capital analyst Helima Croft notes that it may be beneficial for OPEC+ to defer any decision regarding additional barrels until December. Initially, the October increase would involve members who had previously agreed in June to begin reversing the latest layer of output cuts made in response to market conditions. This included a cut of 2.2 million bpd by eight countries, stretching from October 2024 to September 2025, while earlier agreements for reductions of 3.66 million bpd remain effective until the conclusion of 2025.