Summary of OPEC+ Conference Call on December 5, 2024 Industry Overview - Industry: Oil and Gas - Key Organization: OPEC+ (Organization of the Petroleum Exporting Countries and its allies) Core Points and Arguments 1. Production Cuts Extension: OPEC+ has agreed to extend the 2.2 million barrels per day (mbd) voluntary cuts by three months, now set to last until April 1, 2025, marking the third postponement of the unwinding of cuts that have been in place for over two years [2][7][9] 2. Phased Unwinding of Cuts: The unwinding of the 2.2 mbd cuts will now occur over 18 months instead of 12, extending to September 2026. This adjustment is seen as marginally supportive for supply and demand balances [2][9][30] 3. Market Surplus Projections: The expected market surplus for 2025 has been reduced to 0.2 mbd, down from a previous estimate of 0.5 mbd. However, the surplus is projected to grow to 1.2 mbd in 2026 due to returning OPEC+ barrels and faster non-OPEC production growth [2][30][29] 4. Oil Price Forecast: The Brent crude oil price forecast remains at USD 70 per barrel for 2025 and beyond, indicating a stable outlook despite the production adjustments [2] 5. Spare Capacity: OPEC+ is expected to have considerable spare capacity of around 5.2 mbd by the end of 2026, which is above long-term averages. This indicates that the group may struggle to unwind cuts effectively due to non-OPEC production growth outpacing demand [2][30] 6. Iran's Role: The potential for reduced Iranian oil exports due to stricter sanctions under a new US administration is seen as a wildcard that could provide OPEC+ with some leeway to increase its output [2][30] Additional Important Content 1. Compliance Improvements: Recent improvements in compliance by Iraq and alignment from the UAE regarding production increases have helped maintain cohesion within OPEC+ [2][30] 2. Production Baseline Discussions: Discussions on production baselines have been postponed from November 2025 to November 2026, indicating ongoing complexities in managing production levels [2][9] 3. Monthly Production Increases: The monthly increases in production from the OPEC+ "Voluntary Eight" have been adjusted to 120,000 barrels per day, down from 180,000 previously, reflecting a more cautious approach to output increases [30][32] 4. Impact of Non-OPEC Production: Non-OPEC production is expected to grow faster than demand over the next two years, which poses a challenge for OPEC+ in managing its output effectively [2][30] This summary encapsulates the key discussions and implications from the OPEC+ conference call, highlighting the strategic decisions made regarding production cuts and the anticipated market dynamics in the oil industry.
Oil markets_OPEC+ muddles through, but for how long_