MOSCOW, November 27. /TASS/. OPEC+ member states are expected to extend voluntary oil output cuts at the upcoming ministerial meeting on December 1, as market factors prevent the alliance from boosting production without negative effects, experts interviewed by TASS believe.

Eight OPEC+ nations, including Russia and Saudi Arabia, have been reducing oil production voluntarily by 2.2 mln barrels per day since Q1 2024. These countries planned to start ramping up output gradually starting in October 2024, but this increase has been postponed until the end of 2024. Bloomberg said earlier citing sources in OPEC+ delegations that the countries of the alliance might agree to postpone any increases in production by several more months at their December 1 meeting.

Head of the analytical center of the European broker Mind Money Igor Isayev suggests that OPEC+ countries have to extend output cuts due to decreasing oil prices. The price drop can be attributed to weakening tensions in the Middle East, which have diminished the risk premium factored into the price of oil, he said. "If oil consumption goes down, OPEC+ may deepen the cuts. Talks of increasing production or restoring earlier volumes are premature - new restrictions are more probable," the expert noted.

Alexey Belogoryev, research director of the Institute for Energy and Finance Foundation, concurs that the voluntary cuts are the most viable option at this point. However, he sees divisions within the alliance rising. "From a market perspective, there's no point in 2025 when OPEC+ could increase production without triggering a significant price drop," the expert said.

He added that geopolitical shifts, such as potential US President-elect Donald Trump's anticipated crackdown on Iranian oil exports, could disrupt the market. The expert believes that a sudden reduction in Iranian exports could remove around half a million barrels per day from the market for a short period.

Finam’s Nikolay Dudchenko also agrees that OPEC+ will most likely not decide to boost production. "In our view, amid the current oil price levels it would be illogical for the cartel to bring additional volumes to the market," he stressed. However, he highlights US actions as a major risk to oil prices, pointing out the possibility of increased American oil production affecting market dynamics.

What could prevent OPEC+ from boosting output?

According to Isayev, the level of oil consumption, especially in China, remains the key factor in the oil market. The expert notes that China has not been showing tangible growth in oil consumption recently, making its demand one of the biggest uncertainties in the market.

"At this point, we do not see economic activity that would lead to increased oil demand. Apart from China, India, Europe, South Korea and Japan have a big influence, though in those regions the situation is stable. Consequently, Chinese demand specifically will be the determining factor influencing the prospects of an increase in output," he said.

Meanwhile Belogoryev suggests that there are no signs that oil demand will grow in 2025, whereas oil supply from non-OPEC+ countries is strengthening. "The market is clearly teetering on the brink of oversupply. Any increase in OPEC+ production will result in prices falling," he said.