By Alex Lawler, Olesya Astakhova and Ahmad Ghaddar
LONDON (Reuters) -OPEC+ is discussing delaying an oil production increase due to start in October after oil prices hit their lowest level in nine months, four sources from the producer group told Reuters on Wednesday.
The move comes as oil prices have fallen along with other asset classes on concerns about a weak global economy and particularly soft data from China, the world’s largest oil importer.
Last week, the Russia-led Organization of the Petroleum Exporting Countries and allies, or OPEC+, was set to push ahead with an 180,000 barrel per day production increase in October, part of a plan to phase out the latest oil output. cuts.
Still, fragile sentiment in the oil market over the prospect of more supply from OPEC+ and the end of a dispute halting Libyan exports, combined with a weakening demand outlook, have raised concerns within the group, one of the sources said.
A postponement of the October production increase appears “very possible”, another of the four OPEC+ sources said. All sources declined to be named.
Oil prices rose on the possible delay, with the global benchmark rising more than $1 to a session high of $74.80 a barrel and later giving up gains to fall to around $73, the lowest since December.
OPEC and the Saudi government communications agency did not immediately respond to requests for comment.
CHINA CARE
A dispute between rival factions in OPEC producer Libya over control of the central bank, which led to output losses of at least 700,000 barrels per day, has supported oil in recent weeks.
But prices fell about 5% on Tuesday after news that a possible deal to resolve the dispute was in the works. Weak Chinese demand and a slump in global refining margins, which could prompt refiners to process less crude, have also weighed.
“China’s underperformance has dented growth forecasts for 2024 and continues to lag both crude imports and refinery throughput in 2023,” RBC Capital analyst Helima Croft said in a note.
It may be wise for OPEC+ to wait until December before releasing additional barrels, she added.
Overall, OPEC+ is cutting production by a total of 5.86 million barrels per day, or about 5.7% of global demand, in a series of steps agreed since late 2022 to support the market amid uncertainty about the demand outlook and the increasing supply outside the group.
OPEC+ agreed in June to extend 3.66 million barrels per day of those cuts until the end of 2025. OPEC+ also agreed to extend the latest cuts – a 2.2 million barrel per day cut by eight members – by three months until the end of September 2024, and then to gradually reduce this reduction from October to September 2025.
The planned production increase of 180,000 barrels per day in October, which may now be postponed, would come from the eight OPEC+ members that have made these latest cuts.
