BP plc's chief economist, Spencer Dale, stated that with the continuous increase of oil supply from the United States, Brazil, and Guyana, there is limited room for OPEC+ to increase production, as this would put pressure on oil prices.
According to the Futubull Financial News App, BP plc's chief economist, Spencer Dale, stated that with the continuous increase of oil supply from the United States, Brazil, and Guyana, there is limited room for OPEC+ to increase production, as this would put pressure on oil prices. Spencer Dale stated, "OPEC+ will also be concerned about the recovery of oil supply, as if they do so, the growth rate of supply will be faster than demand, which will lead to market instability." He added that besides demand, the tense situation in the Middle East, supply interruptions, and weather conditions will determine next year's oil prices.
OPEC+ has been supporting oil prices by maintaining production cuts for the past two years. However, due to weak demand, oil prices have already given back most of this year's gains. This has led to differences among investors on whether OPEC+ will cancel some of the production cut measures.
It is reported that at the OPEC+ ministerial meeting on June 2, the organization agreed to extend the daily production cut of 3.66 million barrels until the end of 2025 (originally scheduled to expire at the end of 2024). At the same time, the daily "voluntary production cut" plan implemented by 8 OPEC+ member countries, including Saudi Arabia, the United Arab Emirates, and Iraq, will be extended until the end of September this year (originally scheduled to expire at the end of June this year). From October 2024 to September 2025, the 8 key OPEC+ member countries can gradually exit the daily production cut plan of 2.2 million barrels.
Earlier this month, both analysts and industry sources pointed out that global oil demand growth in the coming months needs to accelerate, otherwise the market will have difficulty absorbing the increase in oil supply planned by OPEC+ starting in October.
In the first seven months of this year, the growth in oil demand in major oil-consuming countries globally failed to meet some expectations, and investors are concerned that further economic slowdown could lead to a slowdown in oil demand growth. Analysts say this means that OPEC+ either has to postpone its production increase plans or accept lower prices. Gary Ross, CEO of Black Gold Investors and senior OPEC observer, said, "In the current situation with a high risk of economic recession, OPEC+ is unlikely to increase production as planned in October."
Neil Atkinson, an independent analyst who previously worked at the International Energy Agency (IEA), stated that there is definitely downside risk to oil demand. He said, "If demand growth is slower than we imagined, it is difficult to see how oil prices can rise significantly." He added that he expects OPEC+ to pause its production increase.