The OPEC+ alliance, comprising major oil-producing countries like Saudi Arabia and Russia, is set to deliberate on its production strategy amidst a backdrop of weaker-than-expected demand and increased output from non-member nations like Brazil and Argentina. This meeting comes as oil prices have been under pressure and could remain stable into 2025.
OPEC+ is holding an online session to decide whether to delay a planned increase in production, which is set to start on January 1. The proposed increase would see eight OPEC+ members gradually restoring 2.2 million barrels per day from previous cuts. Analysts now predict that the group may hold off on production raises for another three months as it monitors the market, driven by forecasts showing weaker demand.
Motorists would benefit from a decision to maintain current output levels, with fuel prices having recently fallen. However, European drivers typically see smaller price fluctuations compared to those in the US due to higher tax contributions to fuel costs.
The group’s strategy is complicated by diverging priorities. For Saudi Arabia, oil revenue is essential for Crown Prince Mohammed bin Salman’s ambitious plans to diversify the economy, including the construction of Neom, a $500 billion (€475 billion) futuristic city. For Russia, oil export revenues are critical to state finances and sustaining its war efforts in Ukraine. Yet, increasing production could risk price drops in a market already perceived as adequately supplied.
OPEC has revised its forecast for 2025 demand growth downward to 1.54 million barrels per day, from 1.85 million in July. Commerzbank analysts project that Brent crude prices will average $75 per barrel in the first quarter and $80 per barrel for the rest of the year.
