Oil up by more than $1/bbl as OPEC+ delays output hike

SINGAPORE (ICIS)–Oil prices rose by more than $1/barrel on Monday as oil cartel OPEC and its allies (OPEC+) delayed a planned December production increase by a month, and amid fears of an escalating conflict between Iran and Israel.

• China slowdown behind OPEC+ decision to delay output hike
• China Jan-Sept crude imports down 2.8% on year
• Mideast geopolitical tensions support market

At midday, Brent crude rose by $1.12/barrel to $74.22/barrel, while US crude was up by $1.14/barrel at $70.63/barrel.

Eight OPEC+ countries, led by Saudi Arabia and Russia, had intended to begin returning to producing 180,000 barrel/day from December.

Instead, the group decided on 3 November to extend a plan for a 2.2 million barrel/day cut until at least the end of 2024.

OPEC+ had previously delayed increasing production in October on weak demand from China’s faltering economy.

China is the world’s second-biggest economy and the biggest importer of crude.

Its crude imports on a year-on-year basis have been shrinking for five consecutive months, with September volume down 0.6% at 45.5 million tonnes.

For the first nine months of 2024, China’s total crude imports declined by 2.8% year on year to 412.4 million tonnes, official data showed.

China’s industrial profits in September, meanwhile, slumped by more than 27% year on year.

“While the [output hike] delay until January does not change fundamentals significantly, it does potentially leave the market having to rethink the strategy of OPEC+,” Dutch bank ING said in a note on Monday.

“However, our balance continues to show that the market will be in surplus through 2025 unless OPEC+ continues with cuts through next year,” ING added.

OPEC+ will next meet on 1 December.

MIDEAST TENSIONS RISE
Fears of growing unrest in the Middle East were also behind Monday’s crude gains on a potential retaliatory strike by Iran on Israel.

Iran’s Supreme Leader Ayatollah Ali Khamenei promised retaliation against Israel on 2 November, following an attack by Israel that missed Iran’s energy and oil supplies on 26 October.

The US and Israel has warned Iran against any retaliatory attack.

Focus article by Jonathan Yee

Thumbnail image: At the Qinzhou Port in in south China’s Guangxi Zhuang Autonomous Region – 22 October 2024. (Xinhua/Shutterstock)