OPEC+ delays closely-watched meeting on output cuts

OPEC+ has pushed back a meeting on output policy and whether to gradually unwind voluntary production cuts from January, amid weak prices, demand uncertainty, and wrangling over compliance with existing targets.

The ministerial meeting planned for Dec. 1 has been pushed to Dec. 5, the OPEC Secretariat said Nov. 28, blaming the delay on the fact that several ministers are participating in the 45th session of the Supreme Council of the Gulf Cooperation Council which is scheduled for Dec. 1 in Kuwait.

Another delegate said the postponement is "probably for alignment of positions and to have, as usual, a short meeting".

The group had already changed the format of the meeting from in-person in Vienna to online -- the third consecutive time the group has decided to meet online rather than in person.

The delay comes after talks between Saudi, Russian and Iraqi officials Nov. 26, followed by discussions between Saudi, Russian and Kazakh officials Nov. 27.

Russia, Iraq and Kazakhstan have repeatedly exceeded their OPEC+ production quotas in recent months, causing tension within the group and leading them to submit compensation plans to the OPEC Secretariat.

Overproduction, as well as concerns about weak demand growth, and production outside OPEC+ in 2025 are major challenges facing the group as it determines future policy.

The group currently plans to gradually reintroduce 2.2 million b/d of voluntary cuts to the market starting January 2025. In addition to these voluntary reductions, groupwide cuts totaling 3.6 million b/d will remain in place until the end of 2025.

Roll-over consensus

Many analysts expect the group to delay easing the voluntary cuts given that Brent crude futures have remained in the low $70/b over the last week despite growing uncertainty over US policy under President-elect Donald Trump and ongoing unrest in Ukraine and the Middle East.

Oil analysts at S&P Global Commodity Insights expect Dated Brent, the global benchmark for physical crude, to average $72/b in 2025 and $69/b in 2026, down from an average of $81.44/b so far this year. The base case outlook assumes no major supply shock and that OPEC+ returns cumulative production of 600,000 b/d to the market from the fourth quarter of 2024 to the fourth quarter of 2025 compared with a current plan to unwind the output cuts.

Platts, part of S&P Global Commodity Insights assessed Dated Brent at $73.93/b on Nov. 27.

"A delay makes most sense given demand projections and the need to sustain ambitious national vision plans plus the Trump factor who's signaling more production," Kuwait-based consultant Bader al-Saif said.

"If prices go above $80/b, that would increase the chances of a production increase, which could make the $80/b range a de facto price ceiling for a time," the analysts said in a recent note.

Vitol, the world's biggest independent oil trader, and executives at its oil trading rivals said this week they don't expect OPEC+ to start unwinding output cuts yet with oil prices at current levels and a softer market balance outlook for 2025.