Claudio Descalzi, CEO of Italy’s Eni, stated that the OPEC+ group’s efforts to manage oil supply are heightening price volatility and hindering investments in new production.
OPEC+ producers, who initially planned to ease output cuts starting in December 2024, have postponed this to January 2025. This announcement, made on Sunday, led to a 3% spike in oil prices on Monday, with WTI Crude rising above $70 per barrel.
The group intended to restore 180,000 barrels per day (bpd) in December, contingent on favorable oil prices. However, due to depressed prices, the rollback was delayed.
“While the delay until January does not change fundamentals significantly, it does potentially leave the market having to rethink the strategy of OPEC+,” ING’s commodities strategists Warren Patterson and Ewa Manthey said in a note following the OPEC+ announcement.
At the ADIPEC energy conference in Abu Dhabi, Descalzi remarked, “As soon as (OPEC) say we’re going to release some production, the price went down immediately. Now they say we postpone until the end of the year, and that has made a big impact on the market… the volatile situation is not good.”
He added, “Everybody says we need energy, but with this kind of volatile situation, and this volatility is not really helping investment” in new oil and gas production, as reported by Reuters.
Analysts Warren Patterson and Ewa Manthey from ING highlighted that while the delay doesn’t alter fundamentals, it forces the market to reconsider OPEC+’s strategy. Despite OPEC’s claims of aiming for “market stability,” the uncertainty is causing apprehension in the investment sector.
Story via OilPrice.com