Oil Market Update – OPEC Kicking the Can Once Again

We expect OPEC+ to announce a delay to planned production increases until the end of Q1-25 at today’s ministerial meeting, in line with current market expectations. As well as postponing production increases, the group are also postponing hard questions with several critical issues unresolved should the group agree to pause as we expect. Most critically , the large volume of OPEC + spare capacity remains a drag on oil prices, with the price impact of cuts diminishing substantially as demand growth continues to disappoint. If fundamentals do not improve through the coming quarter, the market will begin to question OPEC’s capacity to unwind cuts without driving oil prices significantly lower. As such, the ability ( o r willingness ) f or Saudi Arabia to continue to delay scheduled group production increases will be in sharp focus , especially in the context of the UAE’s growing production capacity targets and the disproportionate share of that capacity held off the market. Assuming a Q1-25 extension is agreed, we expect Brent to average $73.3/bbl in 2025.