OPEC delays scheduled oil output increase

Eight members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia have decided to postpone the gradual easing of production cuts that were planned to begin in October.

PHOTO: An oil pump jack with OPEC's logo in the background. Getty Images

OPEC+ members, including Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, Oman, and the UAE, have collectively decided to extend the ongoing output cut of 2.2 million b/d for two more months.

This news has put some upward pressure on Brent crude’s price, according to analysts. The Saudi Arabia-led group now plans to gradually ease production beginning 1 December, continuing until November 2025.

“It was no surprise given the recent pressure on the oil market that OPEC+ members yesterday decided to delay plans to phase out their additional voluntary cuts,” two analysts from ING Bank noted.

The Vienna-headquartered group was set to increase production by 180,000 b/d in October, as part of its strategy to gradually restore the 2.2 million b/d output cut to the market. It had previously affirmed that its plan to bring back some supply was provisional and could reversed or paused depending on market conditions.

Iraq and Kazakhstan’s revised compensation plans

Last month, OPEC members Iraq and Kazakhstan submitted revised compensation plans for their excess production for the first seven months of this year. Iraq, OPEC’s second-largest producer, exceeded its quota by 1.4 million b/d, while Kazakhstan overproduced by about 699,000 b/d, the group said.

Both countries have “strongly reaffirmed their commitment to the agreement and to their compensation schedules submitted to the OPEC Secretariat,” OPEC said.

Iraq will reduce production by 95,000 b/d in September and October, followed by cuts of 100,000 b/d in November and 110,000 b/d in December 2024, OPEC said. Meanwhile, Kazakhstan will lower output by 28,000 b/d this month, 265,000 b/d in October, 32,000 b/d in November and 54,000 b/d in December.

Both countries will fully compensate for the entire overproduced volume by September 2025, the coalition added.

“OPEC+ is likely hoping that sentiment turns more positive over the course of the next two months, allowing them to start bringing supply back to the market,” ING Bank’s analysts added.

By Aparupa Mazumder

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