Quick Context: OPEC’s Half-Hearted Delay
Quick Context: OPEC’s Half-Hearted Delay
The producer group postponed planned cut easing at the last minute, supporting prices but delaying the inevitable.
Commodity Context double-header today. Please enjoy these specific thoughts on the latest OPEC+ production increase delay announcement, with more general thoughts on market developments over the past week coming your way later today in Oil Context Weekly.
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OPEC+ has delayed the start of its planned cut easing by two months, with production increases now scheduled to begin in December rather than October.
The course correction reduces average OPEC+ production in Q4 by 300 kbpd relative to the prior plan, which will modestly tighten the market all else equal.
The two month extension is somewhat strange (why not the full quarter?) and feels like a compromise between opposed views on production management going forward—perhaps, a sign of deteriorating group cohesion.
The combination of easing delay and compensation cuts effectively creates an additional OPEC+ production cut over coming months.
OPEC+ announced that the planned production cut easing that was originally scheduled to begin in October will be postponed for two months until December 2024. The producer group maintains the evergreen caveat of “the flexibility to pause or reverse the adjustments as necessary” based on prevailing market conditions.