OPEC+ has started discussing a possible delay to their planned easing of the production cuts after oil prices crashed in the past days to the lowest level in 9 months, sources in the alliance told Reuters on Wednesday.
Early on Wednesday oil prices reversed their slide after reports emerged about the possible delay to the easing of the cuts. Both benchmarks were rising by around 1% as of 7:15 a.m. EDT.
Oil prices plunged on Tuesday to their lowest level since the end of last year, with Brent breaking below $74 and WTI Crude prices dropping briefly below the $70 per barrel threshold. Prices were weighed down by speculation that started at the end of last week that OPEC+ would begin adding 180,000 barrels per day (bpd) in October, as previously planned.
Concerns about oil demand in China, fears of slowing U.S. and European economies, and hopes of a restart of Libya's production halt also added to the bearish sentiment in the market in recent days.
After prices plunged by nearly 5% on Tuesday, reports began to emerge on Wednesday that the OPEC+ group is now reconsidering the unwinding of the cuts as of October.
The alliance is discussing a delay, delegates from OPEC+ told Bloomberg.
One source from the group told Reuters that "There are suggestions to delay the increase," while another noted that a delay is looking "highly possible" at this point.
Most OPEC+ producers need prices well above $80 per barrel to balance their budgets.
"The further pressure we see on prices the more likely that OPEC+ will be forced to scrap plans to bring supply back onto the market," ING commodities strategists Warren Patterson and Ewa Manthey wrote in a note on Wednesday.
"However, with the balance looking soft through 2025, the question is when the group will eventually be able to bring supply back onto the market without putting significant pressure on prices," they added.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More