Eight members of the OPEC+ alliance have decided to postpone production increases, citing weaker demand and competing oil production from non-allied countries as reasons for the decision. The plan to gradually restore 2.2 million barrels per day by 2025 has been pushed back to April 1, 2025.
The move comes as oil prices remain stagnant due to increased supply from countries like Brazil and Argentina. Analysts have reduced their estimates for demand in 2025, leaving OPEC+ in a bind. The decision is also driven by the need for Saudi Arabia and Russia to generate revenue for their respective economic plans, including the development of Neom and state finances.
As a result, US motorists are benefiting from lower gasoline prices, with some states now averaging below $3 per gallon. However, experts warn that holding back production risks losing market share. The US oil price has been stuck around $70 per barrel for weeks, while international benchmark Brent crude trades at $72.57 per barrel.
AAA spokesman Andrew Gross says that oil prices of $70 or less are great for consumers, but the long-term impact is uncertain. OPEC forecasts 1.54 million barrels per day demand growth in 2025, below estimates from other agencies. Analysts predict Brent prices will average $75 per barrel in the first quarter of next year and $80 for the remaining three quarters.
The decision to postpone production increases may have implications for US President-elect Donald Trump’s plans to increase domestic oil production by 3 million barrels a day. The timing and motivations behind OPEC’s move remain unclear, leaving the future of oil prices uncertain.
Source: https://apnews.com/article/opec-oil-gas-prices-energy-7e3a7a4b86e966ba9b609e23825e4ccc