Mon Dec 09 00:50:36 UTC 2024: ## OPEC+ Delays Oil Output Increase, Impacting Price Forecasts
**Vienna/London** – The Organization of the Petroleum Exporting Countries and its allies (OPEC+) have announced a significant delay in planned oil output increases, pushing the start date back three months to April 2025 and extending production cuts until September 2026. This decision follows a recent 18% drop in crude prices due to oversupply and decreased geopolitical risk premiums.
The move has prompted leading investment banks to revise their oil price forecasts. Morgan Stanley raised its Brent crude price forecast for the second half of 2025 to $70 per barrel, while maintaining its prediction of a market surplus, albeit a smaller one (0.8 million bpd compared to its previous estimate of 1.3 million bpd). HSBC retained its $70 per barrel forecast for 2025 but lowered its projected surplus from 0.5 million bpd to 0.2 million bpd, contingent on OPEC’s April production increase. Bank of America, however, anticipates a Brent price average of $65 per barrel in 2025, citing weaker-than-expected demand growth.
Saudi Arabian Energy Minister Prince Abdulaziz bin Salman justified the delay, citing the seasonally weak demand in the first quarter of 2025. He expressed confidence that the market would improve next year despite the projected surplus. Eight OPEC countries will extend their voluntary production cuts of 2.2 million barrels per day until the end of March 2025, gradually phasing them out until September 2026.
Despite OPEC+’s efforts, analysts widely predict a global oil surplus in 2025, driven by cooling Chinese demand and increased production in the Americas. The recent price drop, with US West Texas Intermediate (WTI) futures falling below $67 a barrel and Brent trading near $71, reflects this prevailing market sentiment. The uncertainty surrounding potential US sanctions on Iran and the impact of a possible Trump administration return to power are further complicating the outlook.
First Piper 