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As OPEC+ prepares for its December 1 meeting, several pressing issues will dominate the agenda, including a potential delay in planned supply increases and the broader implications of current market dynamics. With weak global demand, a retreating U.S. dollar, and fading geopolitical tensions, the decisions made during this pivotal meeting could provide insight into the group’s 2025 policy direction.
Will OPEC+ Delay Planned Supply Increases Again?
OPEC+ appears likely to consider another delay in raising production quotas. Weak global oil demand, reflected in lower prices and higher inventories, underpins this potential decision. For example, stationary crude oil volumes rose by 34% within a week, reaching 74.83 million barrels, a signal of a looming supply surplus. Maintaining reduced output would help prevent a further decline in prices, ensuring market stability and protecting member nations’ revenues.
While a delay would support prices in the short term, it may also signal that OPEC+ is prioritizing revenue preservation over long-term market share, a delicate balance that requires strategic finesse.
Does the December 1 Meeting Signal OPEC+’s 2025 Policy?
This meeting could indeed offer a glimpse into OPEC+’s policy framework for 2025. With production normalization potentially delayed into the second half of 2025, the alliance may adopt a cautious strategy that factors in slower economic recovery, particularly in key markets like China.
Additionally, the emphasis on supply flexibility might become a hallmark of OPEC+ policy, ensuring the ability to respond dynamically to demand fluctuations. The group’s continued alignment with Russia, despite geopolitical pressures, suggests that coordinated actions will remain central to its strategy.
Oil Price Forecast: Are We Heading Toward a Supply Glut?
The International Energy Agency (IEA) predicts a supply glut, and current indicators support this possibility. Rising inventories and subdued demand point to a potential oversupply in the first half of 2024. However, OPEC+’s interventionist approach and its capacity to withhold production could mitigate the risk of a significant price collapse.
Prices are likely to oscillate within a $65-$75 range in the coming months, barring major geopolitical disruptions. Resistance levels at $72.67 and $76.42 may cap any bullish runs, while key supports at $67.12 and $64.75 could limit downside risks.
Trump’s Energy Policy and Its Influence on OPEC+
Donald Trump’s anticipated return to the presidency in 2025 could have profound implications for OPEC+. His administration’s likely focus on expanding U.S. shale production and easing energy regulations could increase global supply, challenging OPEC+’s market dominance. The group may respond by intensifying production coordination or exploring strategic alliances with non-OPEC producers to maintain influence.
China’s Stimulus and Market Evolution
China’s economic stimulus measures will play a crucial role in shaping demand. As the world’s largest oil importer, any uptick in Chinese industrial activity or consumer spending could drive a rebound in global demand, supporting higher oil prices. However, the effectiveness and scale of these stimulus efforts remain uncertain, making China a wildcard in the oil market’s near-term trajectory.
The December 1 meeting is more than a routine policy discussion—it is a critical juncture for OPEC+ to recalibrate its strategy amidst shifting market dynamics. Delaying supply increases, while stabilizing in the short term, must be balanced against the need to remain competitive in an evolving energy landscape.
The interplay between geopolitical shifts, economic policies, and demand recovery will shape the oil market’s direction in 2024 and beyond. As OPEC+ navigates these challenges, its ability to adapt and collaborate will determine its role in ensuring long-term market stability.
