OPEC+ delays oil production/ global crude prices/ Saudi Arabia oil policy/ Russia oil revenue/ U.S. gas prices fall/ oil demand forecast 2025/ energy market trends/ FRANKFURT/ Germany/ Newslooks/ J. Mansour/ Morning Edition/ OPEC+ members, led by Saudi Arabia and Russia, have postponed planned oil production increases to April 2025, citing weaker-than-expected demand and rising competition. With U.S. oil prices near $70 per barrel and global benchmarks under pressure, the alliance seeks to stabilize markets amid economic uncertainty.
OPEC+ Postpones Oil Production Increases: Quick Looks
- Delay Announced: Scheduled January 2025 oil production increases pushed to April 2025.
- Gradual Increases: New plan extends production hikes through October 2026.
- Weaker Demand: Sluggish Chinese consumption and rising non-OPEC+ output weigh on prices.
- Gas Prices Drop: U.S. average falls to $3.03 per gallon, benefiting consumers.
- Economic Implications: Saudi diversification plans and Russian war funding depend on stable revenues.
OPEC+ Delays Oil Production Hikes Amid Weak Demand
Deep Look
OPEC+ members, including key players Saudi Arabia and Russia, decided Thursday to delay planned oil production increases until April 2025, as weaker global demand and rising competition from non-member countries keep crude prices under pressure.
The production hikes, originally set to start in January 2025, will now be phased in over 18 months, concluding in October 2026. The decision came after an online meeting of the alliance, which comprises 22 countries collectively managing much of the world’s oil supply.
Challenges Facing OPEC+
The oil market faces multiple headwinds:
- Weak Demand: China’s slower-than-expected recovery has reduced its appetite for oil, a significant factor in global demand forecasts.
- Non-OPEC+ Competition: Increased production from countries like Brazil and Argentina adds supply to an already well-stocked market.
These dynamics have left U.S. crude prices stuck around $70 per barrel, with Brent crude trading just above $72—well below the levels needed for key OPEC+ members to comfortably fund economic and political priorities.
Economic Pressures on Saudi Arabia and Russia
For Saudi Arabia, oil revenues are essential to Crown Prince Mohammed bin Salman’s Vision 2030 initiative, which includes projects like the $500 billion Neom megacity. Delayed production increases could jeopardize the kingdom’s ability to finance its ambitious diversification plans.
Russia, meanwhile, relies heavily on oil exports to fund its economy and military operations in Ukraine. The delay risks ceding market share to non-OPEC+ producers while maintaining revenue levels necessary to sustain government spending.
Consumer Benefits in the U.S.
Slack oil prices have been a boon for U.S. motorists, with the national average gas price dropping to $3.03 per gallon, the lowest since May 2021. Thirty-one states now report averages below $3, offering significant relief to consumers.
“Crude oil prices are the biggest factor in gas costs,” said Andrew Gross, spokesperson for AAA. While U.S. consumers enjoy these price dips, European motorists see smaller changes due to higher fuel taxes.
Demand Projections and Market Outlook
OPEC has revised its 2025 demand growth forecast down to 1.54 million barrels per day, compared to its July estimate of 1.85 million. Other agencies predict even lower growth:
- International Energy Agency: 990,000 barrels per day
- U.S. Energy Information Administration: 1.22 million barrels per day
- Rystad Energy: 1.1 million barrels per day
Analysts at Commerzbank expect Brent crude to average $75 per barrel in early 2025, climbing to $80 later in the year.
Impact of Trump’s Presidency
President-elect Donald Trump’s administration is expected to prioritize increased fossil fuel production. Treasury secretary nominee Scott Bessent has proposed boosting U.S. oil output by the equivalent of 3 million barrels per day, a move aimed at reducing inflationary pressures.
While such policies could benefit consumers with lower prices, they may also conflict with producers’ interests in maintaining profitability.
OPEC+ History and Strategic Role
The Organization of the Petroleum Exporting Countries (OPEC), founded in 1960, originally included five member nations. In 2016, OPEC expanded its influence by partnering with non-member producers, forming the OPEC+ alliance to better control supply and stabilize prices.
Today’s decision underscores the alliance’s ongoing struggle to balance production, market share, and revenue needs in a rapidly shifting energy landscape.
