OPEC+ has decided to delay its plans to increase oil production by three months, pushing the start date to April 2025. Additionally, the group has extended the full unwinding of production cuts by a year, now aiming to complete the process by the end of 2026. The United Arab Emirates, a key member of OPEC+, has also adjusted its output plans, opting to increase production by 300,000 barrels per day starting from April 2025 instead of the previously planned January 2025.

This decision came after the OPEC+ meeting held on Thursday, December 5.

This decision is primarily driven by weak global oil demand and a surge in production from countries outside the OPEC+ alliance.

The oil cartel, OPEC+, which produces roughly half of the world's oil, had initially planned to ease production cuts starting from October 2024. However, due to decreasing global oil demand and increasing production from other countries, they have been forced to repeatedly delay their plans.

Detailed Analysis

OPEC+, the alliance of oil-producing nations led by Saudi Arabia and Russia, has once again opted to delay its plans to increase oil production. This decision comes in response to sluggish global oil demand and a surge in output from countries outside the group.

To support the oil market, OPEC+ members have collectively agreed to withhold 5.86 million barrels of oil per day, roughly 5.7% of global demand. These cuts include a 2 million barrel per day reduction by the entire group, a 1.65 million barrel per day voluntary cut by eight member countries, and an additional 2.2 million barrel per day voluntary cut by the same eight members.

On Thursday, OPEC+ extended the 2 million and 1.65 million barrel per day cuts until the end of 2026. Additionally, the group decided to gradually unwind the 2.2 million barrel per day cut starting from April 2025, with monthly increases of 138,000 barrels per day over 18 months.

Furthermore, the United Arab Emirates has been granted permission to gradually increase its oil production by 300,000 barrels per day from April 2025 to September 2026, rather than starting in January 2025 as previously planned.

The decision by OPEC+ has significant implications for the global oil market. By extending the cuts, the group aims to stabilize prices and prevent a potential oversupply scenario. However, the market's focus is now shifting towards the actions of the incoming U.S. administration, which could have a substantial impact on oil prices through potential policy changes.