- The OPEC+ group, led by Saudi Arabia, plans to begin adding oil supply to the market as early as December.
- Low oil prices could be an even bigger drag on Russian budget revenues than the Western sanctions.
- If oil prices were to drop materially amid ample supply, the revenue hit on Russia could be big.
The OPEC+ group, led by Saudi Arabia, plans to begin adding oil supply to the market as early as December despite evidence that oil demand growth this year would be lower than OPEC had initially expected.
OPEC has now revised down its estimates of global oil demand growth for the third consecutive month, expecting Chinese consumption to continue to underperform earlier projections.
Yet, OPEC+ now plans to add in December 180,000 barrels per day (bpd) to the market and to continue reversing throughout 2025 the current production cuts of about 2.2 million bpd.
There have been reports that OPEC’s top producer and the leader of the OPEC+ alliance, Saudi Arabia, has ditched its unofficial goal of bringing oil prices to the $100 per barrel mark and could be looking to “discipline” non-OPEC+ producers by returning to fight for market share.
This Saudi approach, should the Kingdom pursue it, could sink oil prices and, consequently, the oil revenues for the Russian budget.
