OPEC+ Considers Delay in Output Increase Amid Plummeting Oil Prices

OPEC+ is contemplating delaying a planned output increase next month as oil prices reach a nine-month low. The group had initially planned a 180,000 barrel per day hike in October, but market volatility and weak demand, particularly from China, have raised concerns. A delay now appears highly possible.

OPEC+ is in discussions to delay a planned increase in oil production for the next month as prices plummet to their lowest in nine months, according to three sources within the group who spoke to Reuters on Wednesday.

The producer group had initially set a 180,000 barrel per day hike for October, but growing market volatility and a weak global economic outlook, notably due to underwhelming data from China, have cast doubts on this plan. One source noted that the higher production may now be delayed, and another indicated that a delay is increasingly likely.

Neither the Organization of the Petroleum Exporting Countries nor the Saudi government have commented on the matter. Previously, eight OPEC+ members had committed to raising output to offset earlier production cuts. Yet, persistent volatility, exemplified by disruptions in Libya's oil facilities, could influence the group's decision further.

On the news of a potential delay, Brent crude saw a 1% rise to $74.47 per barrel on Wednesday morning. Despite this uptick, prices hover at their lowest since December, driven by fears of a weak global economy and specific challenges such as the standoff in Libya and reduced Chinese demand.

Earlier, oil prices had dropped 5% on speculation about a potential resolution to the conflicts affecting Libya's oil production. Additionally, broader economic factors, including a slump in global refining margins, may result in decreased crude processing by refiners.

RBC Capital analyst Helima Croft highlighted in a note that China's economic slowdown is undermining growth projections for 2024 and continues to impact the region's crude import and refinery throughput levels for this year as well.

(With inputs from agencies.)