Brent near $93, US WTI up after OPEC+ pushes back production growth, extends cuts till 2026

Oil prices rose on Thursday after OPEC+ decided to delay its planned output increase by three months to April 2025 and extend the full waiver of production cuts by a year to the end of 2026.

At 10:56 a.m. ET, Brent crude rose 38 cents, or 0.53%, to $72.69 a barrel, while U.S. West Texas Intermediate (WTI) rose 36 cents, or 0.53%, to $68.90 a barrel.

OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia, had been planning to begin the cuts from October 2024, but lagging global demand and rising production outside the group forced it to postpone the plans on several occasions.

“Questions were coming up in the meeting whether there is solidarity (among OPEC+) or not, they are certainly coming out of this unified but it also reflects the challenging supply landscape they face as they try to grow this market. also shows.” said John Kilduff, partner at Again Capital in New York.

The gradual phaseout of the 2.2 million barrels per day (bpd) cuts will begin next April in monthly increments of 138,000 bpd, and last for 18 months until September 2026, according to Reuters calculations. OPEC+ pumps almost half the world’s oil.

“It was the only option they (OPEC+) had unless they were prepared to suffer the consequences of lower prices,” said Ole Hansen, head of commodity strategy at Saxo Bank.

“They reiterate that these barrels will indeed come back,” said SEB chief commodity analyst Bjarne Schildrop. “This is a limited time frame. It means there will be no increase in the price of oil in the next few years.”

Elsewhere, a larger-than-expected decline in US crude stockpiles last week also provided some support to prices.

And in the Middle East, Israel said on Tuesday it would return to war with Hezbollah if their ceasefire is broken and its attacks would go deeper into Lebanon and target the state itself.

Meanwhile, Donald Trump’s Middle East envoy has traveled to Qatar and Israel to kick off talks to help the US president reach a Gaza ceasefire and hostage release deal before he takes office on January 20. A source giving information about it said. Reuters.

Eight OPEC countries will extend their “voluntary adjustment” of 2.2 million barrels per day until the end of March, the Vienna-based group said in a statement after a virtual meeting.

After that, those cuts will be “gradually phased out” on a monthly basis until the end of September 2026, the group said, adding that this is “subject to market conditions.”

Without a new deal, the eight countries were to start increasing production in January to gradually bring it back to 2023 levels.

Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates have already twice pushed back output growth that was scheduled to begin in October and then December.

The International Energy Agency said last month that even if OPEC cuts persist, global supply will exceed demand by more than a million barrels a day next year.

OPEC countries are currently holding back 6 million barrels of oil per day, including 2.2 million barrels of production per day that they were discussing putting back on the market.

On Thursday the cartel decided to extend two more tranches of cuts by a year to the end of 2026, the group said.

OPEC members decided to suspend the production increase, which was to take effect from January 1, in an online meeting. The plan was to gradually restore 2.2 million barrels per day during 2025.

That process will now be extended to April 1, 2025, and production will gradually increase over 18 months until October 2026.

OPEC, which includes Saudi Arabia as the key member of the OPEC producers’ cartel and Russia as the leading non-OPEC member in the 22-nation alliance, has imposed several sets of agreed production cuts to support prices.

Oil prices have slowed due to weaker-than-expected demand from China as well as increased production from countries like Brazil and Argentina that are not in OPEC.

Among the beneficiaries of the current state of the oil market are American motorists, who have seen gasoline prices fall to their lowest in 2 1/2 years, near $3 a gallon.

Oil analysts are busy trimming their demand estimates for next year, meaning OPEC could remain in trouble until 2025.

Oil prices have slowed due to weaker-than-expected demand from China as well as increased production from countries like Brazil and Argentina that are not in OPEC.

Among the beneficiaries of the current state of the oil market are American motorists, who have seen gasoline prices fall to their lowest in 2 1/2 years, near $3 a gallon.

Oil analysts are busy trimming their demand estimates for next year, meaning OPEC could remain in trouble until 2025.