The move by OPEC+ comes as the market faces the prospect of a ballooning oversupply that has seen global benchmark Brent lose about 10% over the past three months. Prices have risen from a five-month low after tighter US sanctions on Russia raised question marks about the supply prospects from the major exporter.
The eight key members of OPEC+ are still left with roughly 1.2 million barrels a day of the current supply tranche still to restore. The group’s actual output increases have fallen significantly short of advertised volumes, as some members offset earlier overproduction and others struggle to pump more, limiting the impact on the market.“Delegates said the decision to pause from January reflects expectations of a seasonal slowdown,” ANZ Group Holdings Ltd. analysts Brian Martin and Daniel Hynes said in a note. “We suspect they’re also aware that the market may struggle to take any additional barrels, particularly if disruptions to Russian supply end up being temporary.”
Traders will also be monitoring physical disruptions to supply, after a massive Ukrainian drone attack in the Black Sea, which left an oil tanker ablaze and damaging oil-loading facilities in the port city of Tuapse. The area is home to a major refinery run by Rosneft PJSC, which was sanctioned last month by the US, along with Lukoil PJSC.
President Donald Trump, meanwhile, said Africa’s largest oil producer Nigeria should expect possible US military action for not stopping inter-religious strife, just days after he contradicted reports that Washington was readying for strikes on Venezuela.
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