The Organization of Petroleum Exporting Countries (OPEC) and its allies know as OPEC+ made no changes to plans to start gradually reviving oil production towards the end of the year, despite signs of an impending surplus.
A statement from 23-nation the group after an online monitoring meeting on Wednesday didn’t announce any alterations.
Led by Saudi Arabia and Russia, OPEC+ plans a series of monthly increases beginning with a 180,000 bpd hike in December two months later than originally scheduled because of fragile market sentiment.
Oil prices have rallied more than 5 per cent in the past two days after Iran, an OPEC member, launched strikes against Israel in an escalation of the Middle East’s year-long conflict.
But at around $75 a barrel, prices remain 14 per cent down from July as traders focus on weak demand in China and swelling supplies from the Americas.
While the retreat offers relief to consumers after years of rampant inflation and for central banks as they pivot to lowering interest rates it poses a financial threat to the Organization and its allies.
Saudi Arabia slashed growth forecasts this week and projected deeper budget deficits than previously estimated as the cost of efforts to overhaul the kingdom’s economy outpaces revenue.
Russia, meanwhile, relies on energy income to finance President Vladimir Putin’s war against Ukraine.
The JMMC meeting on Wednesday mainly focused on the failure of Iraq, Kazakhstan and Russia to implement their agreed cutbacks, according to delegates who asked not to be identified.
While the countries “reiterated their strong commitment” to the agreement, they mostly continue to pump above their output quotas and haven’t yet started extra cutbacks pledged as compensation for cheating.
The countries held individual workshops to discuss output levels in September.
The OPEC+ plans to restore roughly 2.2 MMbpd in monthly tranches between December and late 2025, and allow the United Arab Emirates to make an extra hike in recognition of its increased production capacity.
The alliance has several more weeks to decide whether to go ahead with the December increase. Ministers are scheduled to gather on Dec. 1 to review policy for next year.
With oil markets poised to deteriorate further, analysts including JPMorgan Chase & Co. and Citigroup Inc. have expressed skepticism that OPEC+ will press on with its scheduled supply increases.
Consumption is due to grow by less than 1 MMbpd in 2025, and supplies are set to swell by 50 per cent more, leaving a glut even if OPEC+ continues to restrain output, according to estimates from the International Energy Agency.