Opec+ to raise output, reversing 2.2m 2024 barrel cut early
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The news: Opec+ will raise oil production by 547,000 barrels a day in September, fully reversing the 2.2 million bpd cut made by eight members in January 2024, the group said in a statement on Sunday.
The context: The January 2024 cut was prompted by concerns over sluggish oil demand growth in China and the rise of electric vehicles. That, however, failed to stop prices falling and created internal tensions as Opec+ lost market share to the US, Brazil and Canada.
In December, Opec+ said it would start “gradually” unwinding the cuts, but moved faster than expected.
The latest decision completes the accelerated reversal of the 2.2 million bpd cuts and puts the group roughly a year ahead of schedule.
The move comes amid diplomatic pressure on India to reduce Russian oil purchases and efforts by the US to bring Moscow to the negotiating table.
The decision, which a senior Opec delegate told Bloomberg was made in a 16-minute virtual meeting, also includes an extra 300,000 bpd of production granted to the UAE.
Analysts and forecasters expect a glut of crude by the end of the year, with the International Energy Agency projecting a surplus of 2 million barrels a day in the fourth quarter as Chinese demand cools and supply rises from rival markets.
The numbers: Brent crude fell 19% to below USD60 ($92.8) a barrel between April and May as traders priced in the supply increase, but has since clawed back losses, reaching just under USD70 Friday. That is still down 6.7% for the year.
The sources: OPEC, Bloomberg, Financial Times
