(Bloomberg) — Oil traders expect OPEC+ to hold crude production steady when it meets this weekend, as the group pauses after a series of accelerated supply increases.
Delegates from the Organization of the Petroleum Exporting Countries and its allies have sent mixed signals about their next move, after completing the revival of 2.2 million bpd of halted production a year ahead of schedule. While demand has held up in recent months, the world is on track for a hefty surplus by year-end, according to the International Energy Agency.
Oil prices are down about 9% this year as OPEC+’s surprise ramp-up threatens to swell a surplus created by slowing Chinese fuel consumption and surging supplies from the US, Brazil and Canada. Brent futures traded near $68 a barrel in London on Monday, a win for President Donald Trump who consistently pushes for lower fuel costs, but threatening the revenue of producers from the Persian Gulf to America’s shale heartlands.
“I expect OPEC+ to hold fire through the current refinery maintenance season to assess if the widely expected downside to crude prices will materialize,” said Aldo Spanjer, head of energy strategy at BNP Paribas SA.
Officials from the cartel have said their supply surge was partly intended to recoup market share ceded to rivals during years of cutbacks. A further tranche of 1.66 million barrels a day of idle OPEC+ production capacity output is formally due to remain offline until the end of next year.
Despite this pursuit of market share, a majority of traders and analysts surveyed by Bloomberg said Saudi Arabia and its partners won’t immediately press on with reviving these supplies. Seventeen respondents predicted that OPEC+ will agree to keep production levels flat in October when they hold a video conference on Sunday, while six expected the group to proceed with a modest increase.
At their previous meeting last month, eight key alliance members approved a hike of 547,000 bpd for September, completing the return of 2.2 million bpd shuttered in 2023. Officials signaled at the time that their next move just as easily be a cut as a further hike.
“The phase-out of the additional voluntary production adjustments may be paused or reversed subject to evolving market conditions,” the producers said in a statement on OPEC’s website.
Some analysts, such as Martijn Rats at Morgan Stanley, predict that OPEC+ will be compelled to cut production next year in order to avert a significant glut.
