OPEC+ May Not Boost Output Unless Oil Hits $70/Barrel, Says S&P Global
Press Hub UCapital
Share:
The recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies to extend their deep output cuts until the end of 2026 underscores a calculated strategy to maintain price stability and counter weak demand. According to S&P Global Commodity Insights, the group is unlikely to increase production unless prices consistently rise above $70 per barrel.
Key Decisions and Market Implications
Extended Output Cuts: OPEC+ has deferred the easing of its 2 million barrels per day (b/d) production cuts from December 2025 to April 1, 2025, with the cuts now scheduled to remain in place through the end of 2026.
Price Threshold for Action: S&P Global Commodity Insights forecasts that oil prices will average between $60 and $75 per barrel through 2026. At this range, OPEC+ is expected to maintain its current production levels. Any formal output increases are unlikely unless prices exceed $80 per barrel. Strategic Restraint to Balance Supply and Demand
OPEC+ faces a delicate balancing act as it seeks to support prices without jeopardizing market share:
Managing Expectations: Bhushan Bahree, Executive Director at Commodity Insights, noted that OPEC+ nations are hesitant to raise production unless they are confident it will not negatively impact prices. "They cannot do that just yet," he emphasized, reflecting the group's cautious approach amid uncertain demand growth.
Near-Term Supply Dynamics: S&P Global Commodity Insights highlighted that there is no immediate need for additional OPEC+ oil in the market, given rising non-OPEC supply and slower-than-expected global demand growth.
Price Outlook and Scenarios
Base Case (Prices $60-$75/b): This scenario aligns with current market expectations and would see OPEC+ maintain its production cuts to prevent oversupply.
Upside Case (Prices $80+/b): If prices break above $80 per barrel, the likelihood of OPEC+ increasing production rises significantly. Such an environment may reflect a stronger-than-anticipated recovery in demand, potentially driven by geopolitical disruptions or a robust rebound in China's consumption.
Key Decisions and Market Implications
Extended Output Cuts: OPEC+ has deferred the easing of its 2 million barrels per day (b/d) production cuts from December 2025 to April 1, 2025, with the cuts now scheduled to remain in place through the end of 2026.
Price Threshold for Action: S&P Global Commodity Insights forecasts that oil prices will average between $60 and $75 per barrel through 2026. At this range, OPEC+ is expected to maintain its current production levels. Any formal output increases are unlikely unless prices exceed $80 per barrel. Strategic Restraint to Balance Supply and Demand
OPEC+ faces a delicate balancing act as it seeks to support prices without jeopardizing market share:
Managing Expectations: Bhushan Bahree, Executive Director at Commodity Insights, noted that OPEC+ nations are hesitant to raise production unless they are confident it will not negatively impact prices. "They cannot do that just yet," he emphasized, reflecting the group's cautious approach amid uncertain demand growth.
Near-Term Supply Dynamics: S&P Global Commodity Insights highlighted that there is no immediate need for additional OPEC+ oil in the market, given rising non-OPEC supply and slower-than-expected global demand growth.
Price Outlook and Scenarios
Base Case (Prices $60-$75/b): This scenario aligns with current market expectations and would see OPEC+ maintain its production cuts to prevent oversupply.
Upside Case (Prices $80+/b): If prices break above $80 per barrel, the likelihood of OPEC+ increasing production rises significantly. Such an environment may reflect a stronger-than-anticipated recovery in demand, potentially driven by geopolitical disruptions or a robust rebound in China's consumption.