OPEC and its allies will likely delay a supply increase planned for January by three months, according to a survey of oil analysts, traders and refiners.
The 23-nation coalition led by Saudi Arabia and Russia will probably defer the 1.9 million-barrel hike when they meet next week, according to all but two of 36 respondents to the poll. Twenty-seven predicted a delay until the start of the second quarter.
While crude prices have rebounded to an eight-month high, demand in early 2021 still looks too fragile to absorb the extra barrels. At the same time, key OPEC+ members Iraq and the United Arab Emirates have signaled they’re eager to ramp up sales as soon as possible.
“OPEC+ will make good on its commitment to be proactive and adjust to evolving market circumstances, notably short-term economic and oil demand weakness,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA. “A three-month delay will allow for a consensus to be reached quickly, without too much push back from members eager to start increasing their output again.”
Three respondents to the survey forecast a delay of six months to the second half of 2021, while two predicted that the Organization of Petroleum Exporting Countries and its allies will postpone by two months, and one by just one month. Deferring the increase will require the coalition to continue to keep about 7.7 million barrels of daily output offline.