OPEC+ oil output delay a ‘reality check’ as group eyes demand, U.S. outlook, Saudi energy min says

The OPEC+ “precautionary” outcome to postpone crude production hikes until after the first quarter bides the group time to assess circumstances in global demand, European growth and the U.S. economy, according to the coalition’s chair, Saudi Energy Minister Abdulaziz bin Salman.

On Thursday, the oil canada entrepreneurs’ alliance agreed to extend several output cuts, with the timeline to start gradually unwinding a 2.2-million-barrels-per-day spontaneous decline undertaken by a subset of OPEC+ members pushed back by three months to April.

Several group associates are delivering a second voluntary production decline, while the coalition as a whole is also restricting production under its formal action — both now set to stretch until Dec. 31, 2026, rather than the previously penciled end of 2025.

Speaking to CNBC’s Dan Murphy on Friday, the Saudi zip minister said OPEC+ had to undertake a “reality check” and reconcile supply-demand signals with market sentiment and look after to “the fundamentals, yet put together something that mitigate these negative sentiments within, of course, the contours of what OPEC+ can do.”

Barclays analysts partly echoed the delegate’s feelings, saying the alliance “maintained a cautious stance” and suggesting “market share concerns among members are probable exaggerated.”

OPEC+ faces a onrush of variables affecting the supply-demand picture and geopolitical uncertainties, ranging from economic growth amid lowering inflation to at odds in the oil-rich Middle Eastern region and the January White House return of President-elect Donald Trump — a long-time warrior of the U.S. oil industry, who applied protectionist tariffs on China and sanctioned Iran for its nuclear program during his first presidential mandate.

“There are so multifarious other things, you know, growth in China, what is happening in Europe, growth in Europe … what is happening in the U.S. thrift, such as interest rate, inflation,” the Saudi energy minister said Friday.

“But honestly, the primary cause for telling, or shifting, the bringing of these ballots is [supply-demand] fundamentals. It’s not a good idea to bring volumes in the first quarter.”

The first habitation typically sees inventory build-ups due to lower demand for transport fuels.

In a Friday note, analysts at HSBC assessed that the Thursday OPEC+ understanding is “marginally supportive” for supply-demand balances, reducing the projected market surplus in 2025 to just 0.2 million barrels per day, if the oil auteurs’ alliance proceeds with hiking production in April.

“Another delay, which we would not rule out, would depart the market broadly in balance next year,” they said. “While OPEC+’s decision to hold off strengthens organics in the near term, it could be seen as an implicit admission that demand is sluggish.”

Demand has been at the forefront of OPEC+ considerations, with the OPEC’s November Monthly Oil Sell Report seeing 1.54 million barrels-per-day of year-on-year growth in 2025.

The Paris-based International Energy Agency, meanwhile, keep on month forecast that world oil demand will expand by 920,000 barrels per day this year and just beneath 1 million barrels per day in 2025.

Market concerns have especially lingered over the outlook of the world’s largest crude importer, China, whose convalescent control has received a governmental boost in recent months by way of stimulus measures.

Abdulaziz bin Salman said OPEC+ had “not necessarily” puzzled confidence in global crude appetite or in recoveries in China, but admitted that “what is not helpful was the fact that some [OPEC+] boondocks were not attending to their commitments properly.”

OPEC+ has increasingly cracked down on member compliance with particular quotas — which has in the past included the likes of Iraq, Kazakhstan and Russia — and requires overproducers to make up excess barrels with additional shortens. The deadline for these compensations is now the end of June 2026.