29/08/2024 by Richard
The OPEC+ group has very little scope to wind back its production cuts according to Spencer Dale, the chief economist at energy giant BP, which also makes the Castrol metalworking range.
The OPEC+ group comprises the members of OPEC itself, plus a number of other oil-producing countries like Russia and Mexico. In recent times, it has been trying to support oil prices through three layers of cuts: 2 million barrels per day (bpd) in group cuts, 1.66 million bpd in voluntary cuts from nine members, and a further 2.2 million bpd in additional voluntary cuts by eight members.
At its last meeting in June, the group decided to maintain the first two layers of cuts through to the end of 2025, but it also wants to look at unwinding the third layer of cuts from October this year.
Speaking in New Delhi to reporters, Dale pointed out the decision was for OPEC+ alone, but he added:
“They will also be nervous about bringing oil back on because if they do so, the total supplies are growing more quickly than demand, and that will lead to instability in the market.”
According to Dale, increased production from the US, Guyana and Brazil will limit the scope that OPEC+ has to increase production without causing a supply surplus and weighing down on oil prices. Lacklustre economic news from China has also caused oil prices to reverse some of the gains they have made this year due to the OPEC+ production cuts.
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