OPEC+ countries regularly extend their production cuts, believing that there is generally enough oil on the market. Indeed, shale production in the US remains high, while demand in China, on the contrary, is slowing.
Rystad Energy analyst Viktor Kurilov draws attention to another important factor – as early as 2025, new deepwater projects will provide a significant increase in supplies to the market. It is possible that the alliance of exporters will soon have to make new decisions on quota reductions
At the meeting on December 5, the OPEC+ alliance as a whole extended voluntary oil production cuts of 2.2 million barrels per day (bpd) for another three months – until the end of March 2025 and approved a slower schedule for restoring production, which will now stretch for 18 months, from April 2025 to September 2026.
This was an expected decision, the main reason for which was the coming to power in the United States of the new administration of President Donald Trump. At the same time, the possibilities for stimulating production in the US by easing regulatory restrictions seem very limited. This is well illustrated by Chevron’s recent decision to cut capital investment in the large Permian basin by 10% next year. However, new sanctions against Iran and Venezuela could potentially change the situation on the market, and the increased support for Israel from the new administration could increase the geopolitical premium in oil prices. As a result, OPEC+ may even have to speed up the return of production to its previous level.
According to Rystad Energy, the latest OPEC+ decision will remove about 1 million bpd from the market. If the quotas established under the deal are observed, the oil market will be generally balanced in 2025.