August 30, 2024
OPEC+ is set to proceed with a planned oil output hike from October, as Libyan outages and pledged cuts by some members to compensate for overproduction counter the impact of sluggish demand, six sources from the producer group told Reuters.
Eight OPEC+ members are scheduled to boost output by 180,000 barrels per day in October, as part of a plan to begin unwinding their most recent layer of output cuts of 2.2 million bpd while keeping other cuts in place until end-2025.
A slowdown in demand growth, notably in China, has weighed on oil prices and prompted some analysts to doubt whether the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, will go ahead with the October increase.
But the six OPEC+ sources told Reuters the plan to increase production remains in place as the loss of Libyan output tightens the market and hopes build that the U.S. Federal Reserve will cut interest rates in mid-September.
OPEC, the Saudi government communications office and the office of Russian Deputy Prime Minister Alexander Novak didn’t immediately respond to requests for comment.
“There are many uncertainties on demand but there is also the hope that the Fed’s interest rate cut will boost economic growth,” one of the sources said.
Brent crude prices fell by about $1 on Friday trading at just under $79 a barrel by 1341 GMT.
OPEC had previously communicated that it could pause or reverse the production hikes if it decides the market is not strong enough.
Two of the sources said that future output hikes will be decided on a month by month basis.
The planned increase for October is only a fraction of the 700,000 bpd of offline Libyan oil output and the compensation cuts pledged by Iraq, Kazakhstan and Russia.
REUTERS
