Brent crude is totally at the mercy of OPEC+, but the group will stay the course through 2025.
That’s what Bjarne Schieldrop, chief commodities analyst at Skandinaviska Enskilda Banken AB (SEB), said in a report sent to Rigzone by the SEB team on Tuesday.
“The current oil price is totally at the mercy of OPEC+,” Schieldrop stated in the report.
“The group is planning to put volumes back into the market in 2025 and that places somewhat of a cap on the upside,” he added.
“The group really proved its resolve repeatedly in 2024 and the oil market now probably feels quite confident that it will stay the course also in 2025 and supply volumes in a manner that yields an acceptable price of $70-$80 per barrel,” he went on to state.
In a separate report sent to Rigzone on Monday by the SEB team, Schieldrop noted that OPEC+ proved strong resolve on supply restraint last year.
“We have solid resolve by OPEC+ to keep oil prices steady,” Schieldrop said in that report.
“They have confirmed and reconfirmed this solid resolve again and again over the past half year by postponing heralded production hikes time and time again,” he added.
“There will be no increase in Q1-25, and then the latest plan is to increase production gradually by 2.2 million barrels per day over 18 months from April. If need be, they will likely postpone yet again if needed when we get towards April,” Schieldrop went on to state.
Rigzone has contacted OPEC for comment on the SEB reports. At the time of writing, OPEC has not yet responded to Rigzone’s request.
In a report sent to Rigzone last month by Standard Chartered Bank Commodities Research Head Paul Horsnell, analysts at the bank, including Horsnell, highlighted that the OPEC+ meeting held on December 5 – along with discussions on the sidelines between Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman – produced four main changes.
“One – the unwind of the November 2023 tier of voluntary cuts remains subject to market conditions and is now scheduled to start in April 2025 and finish in September 2026, i.e., it will begin three months later than the previous schedule and end nine months later,” they said in the report.
“Two – the UAE’s already-agreed 0.3 million barrels per day base target increase will now be phased in from April 2025 to September 2026 rather than over 12 months starting January 2025,” they added.
“Three – the baselines for all countries with targets have been extended by a year to end-2026; and four – payback schedules for 2024 overproduction will be carried out over 2025 and H1- 2026,” they continued.
The next OPEC and non-OPEC Ministerial Meeting is scheduled to be held on May 28, according to a statement posted on OPEC’s website on December 5.
A statement posted on OPEC’s site on December 10 highlighted that the Declaration of Cooperation (DoC) between OPEC Member Countries and non-OPEC oil-producing countries turned eight years old that day.
“Since its inception, the DoC framework has aimed at facilitating cooperation and dialogue, including at the technical and research levels, among its participants in the interest of oil market stability,” the statement noted.
“Eight years ago, a group of leading oil producers, including OPEC Member Countries and some non-OPEC oil-producing nations, decided to join forces to address the instability the global oil market was then facing, marking the beginning of a new chapter in multilateralism, international cooperation, and the history of the oil industry,” OPEC Secretary General Haitham Al Ghais said in the statement.
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