FRANKFURT, Germany (AP) — Eight members of the OPEC+ alliance of oil exporting countries decided Thursday to put off increasing oil production as they face weaker than expected demand and competing production from non-allied countries — factors that could keep oil prices stagnant into next year.
The OPEC+ members decided at an online meeting to postpone production increases that had been scheduled to take effect Jan. 1. The plan had been to start gradually restoring 2.2 million barrels per day over the course of 2025.
That process will now be pushed back to April 1, 2025 and production increases will gradually take place over 18 months until October 2026.
OPEC+, which includes Saudi Arabia as the dominant member of the OPEC producers’ cartel, and Russia as the leading non-OPEC member in the 22-country alliance, have imposed several sets of cuts to agreed output to support prices.
Oil prices have been slack due to weaker than expected demand from China as well as increased production from countries like Brazil and Argentina that aren’t in OPEC+.
Among the beneficiaries of the current state of the oil market are U.S. motorists, who have seen gasoline prices fall to their lowest in 2 1/2 years to near $3 a gallon.
Oil analysts have been busy reducing their estimates for demand for next year, meaning that OPEC+ could remain in a bind well into 2025.
The Saudis need oil revenue to carry out Crown Prince Mohammed Bin Salman’s ambitious plans to diversify his country’s economy, including the development of Neom, a $500 billion futuristic city in the desert. For Russia, oil export revenues are a key pillar of state finances and funding for the war against Ukraine. Holding back production risks losing market share. Yet increasing production and sales could lower prices in a global economy that analysts say is already well supplied with oil.
U.S. oil has been stuck around $70 per barrel for weeks and traded little changed at $68.75 on Thursday after the announcement, down from $80 in August. International benchmark Brent crude traded at $72.57 per barrel, down from around $80 in July.
One result of those slack prices is that U.S. average pump prices for gasoline fell to $3.03 a gallon this week, the lowest since May, 2021 and well down from their record peak of $5.02 from June, 2022, according to motoring club AAA.
Thirty-one U.S. states now have average gas prices below $3 a gallon.
U.S. oil price levels of $70 or less “are great for consumers,” said AAA spokesman Andrew Gross. Crude oil makes up about half the price of a gallon of gasoline, making crude the key factor on top of distribution costs and taxes. Motorists in Europe see far smaller fluctuations because taxes make up a much bigger chunk of the cost.
OPEC has cut its forecast for 2025 demand growth to 1.54 million barrels per day, from 1.85 million barrels per day in July. That is at the high end of estimates compared to those from the International Energy Agency at 990,000 barrels per day, U.S. Energy Information Administration at 1.22 million and energy intelligence firm Rystad Energy at 1.1 million.
Analysts at Commerzbank foresee Brent prices averaging $75 per barrel in the first quarter of next year and $80 for the remaining three quarters.
In the United States, Donald Trump’s return to the White House will likely lead to more fossil fuel production. Not only has the President-elect campaigned on more drilling, but his Treasury secretary nominee Scott Bessent has put together an economic plan with the goal of increasing domestic oil production by the equivalent of 3 million barrels a day. Bessent has indicated that the additional oil production would reduce inflationary pressures for U.S. consumers. But the Trump team has not fully outlined why oil producers would ramp up supplies and lower prices to levels that could hurt their profits.
The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization founded in 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. It has since expanded to 12 member countries. In 2016, largely in response to dramatically falling oil prices due to U.S. shale oil output, OPEC signed an agreement with 10 other oil-producing countries to create OPEC+.
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Josh Boak contributed from Washington DC.
FILE -The logo of the Organization of the Petroleoum Exporting Countries (OPEC) is seen outside of OPEC's headquarters in Vienna, Austria, March 3, 2022. A street sign that says „one way" is positioned below the logo. (AP Photo/Lisa Leutner, File)
Azerbaijan on Thursday observed a nationwide day of mourning for the victims of the air crash that killed 38 people and left all 29 survivors injured as speculation mounted about a possible cause of the crash that remained unknown.
Azerbaijan Airlines' Embraer 190 was en route from Azerbaijan's capital of Baku to the Russian city of Grozny in the North Caucasus on Wednesday when it was diverted for reasons yet unclear and crashed while making an attempt to land in Aktau in Kazakhstan after flying east across the Caspian Sea.
The plane went down about 3 kilometers (around 2 miles) from Aktau. Cellphone footage circulating online appeared to show the aircraft making a steep descent before smashing into the ground in a fireball. Other footage showed part of its fuselage ripped away from the wings and the rest of the aircraft lying upside in the grass.
On Thursday, national flags were lowered across Azerbaijan, traffic across the country stopped at noon, and signals were sounded from ships and trains as the country observed a nationwide moment of silence.
Speaking at a news conference Wednesday, Azerbaijani President Ilham Aliyev said that it was too soon to speculate on the reasons behind the crash, but said that the weather had forced the plane to change from its planned course.
“The information provided to me is that the plane changed its course between Baku and Grozny due to worsening weather conditions and headed to Aktau airport, where it crashed upon landing,” he said.
Russia’s civil aviation authority, Rosaviatsia, said that preliminary information indicated that the pilots diverted to Aktau after a bird strike led to an emergency on board.
According to Kazakh officials, those aboard the plane included 42 Azerbaijani citizens, 16 Russian nationals, six Kazakhs and three Kyrgyzstan nationals.
As the official crash investigation started, theories abounded about a possible cause, with some commentators alleging that holes seen in the plane's tail section possibly indicate that it could have come under fire from Russian air defense systems fending off a Ukrainian drone attack.
Ukrainian drones had previously attacked Grozny, the provincial capital of the Russian republic of Chechnya, and other regions in the country's North Caucasus. Some Russian media claimed that another drone attack on Chechnya happened on Wednesday, although it wasn't officially confirmed.
Osprey Flight Solutions, an aviation security firm based in the United Kingdom, warned its clients that the “Azerbaijan Airlines flight was likely shot down by a Russian military air-defense system.” Osprey provides analysis for carriers still flying into Russia after Western airlines halted their flights during the war.
Osprey CEO Andrew Nicholson said that the company had issued more than 200 alerts regarding drone attacks and air defense systems in Russia during the war.
“This incident is a stark reminder of why we do what we do,” Nicholson wrote online. “It is painful to know that despite our efforts, lives were lost in a way that could have been avoided.”
Asked about the claims that the plane had been fired upon by air defense assets, Kremlin spokesman Dmitry Peskov told reporters that “it would be wrong to make hypotheses before investigators make their verdict.”
Officials in Kazakhstan and Azerbaijan have similarly avoided comment on a possible cause of the crash, saying it will be up to investigators to determine it.
Jon Gambrell in Dubai, United Arab Emirates, and Aida Sultanova in London, contributed to this report.
In this image taken from video released by the Russian Emergency Ministry Press Service, rescuers transport wounded passengers from a medical plane after the Azerbaijani Airline crashed, near the Kazakhstani city of Aktau, upon their arrival at the Zhukovsky airport outside Moscow, Russia, on Thursday, Dec. 26, 2024. (Russian Emergency Ministry Press Service via AP)
In this photo taken from a video released by the administration of Mangystau region, rescuers prepare to carry a wounded passenger near the Kazakhstani city of Aktau, Thursday, Dec. 26 , 2024, after a plane of Azerbaijani Airline crashed. (The Administration of Mangystau Region via AP)
In this photo provided by Azerbaijan's Presidential Press Office, Azerbaijani President Ilham Aliyev, center, holds a meeting following an Azerbaijan Airlines Embraer 190 plane crash, in Baku, Wednesday, Dec. 25, 2024. (Azerbaijani Presidential Press Office via AP)
In this image released by the Russian Emergency Ministry Press Service, rescuers carry a wounded passenger near the Kazakhstani city of Aktau, Thursday, Dec. 26 , 2024, after a plane of Azerbaijani Airline crashed. (Russian Emergency Ministry Press Service via AP)
In this image released by the Russian Emergency Ministry Press Service, rescuers prepare to carry a wounded passenger near the Kazakhstani city of Aktau, Thursday, Dec. 26 , 2024, after a plane of Azerbaijani Airline crashed. (Russian Emergency Ministry Press Service via AP)
In this photo released by Kazakhstan's Emergency Ministry Press Service, rescuers work at the wreckage of Azerbaijan Airlines Embraer 190 lays on the ground near the airport of Aktau, Kazakhstan, Thursday, Dec. 26, 2024. (Kazakhstan's Emergency Ministry Press Service via AP)
In this photo released by Kazakhstan's Emergency Ministry Press Service, rescuers work at the wreckage of Azerbaijan Airlines Embraer 190 lies on the ground near the airport of Aktau, Kazakhstan, Thursday, Dec. 26, 2024. (Kazakhstan's Emergency Ministry Press Service via AP)
The wreckage of Azerbaijan Airlines Embraer 190 lays on the ground near the airport of Aktau, Kazakhstan, Wednesday, Dec. 25, 2024. (AP Photo/Azamat Sarsenbayev)
In this photo taken from a video released by the administration of Mangystau region, the wreckage of Azerbaijan Airlines Embraer 190 lies on the ground near the airport of Aktau, Kazakhstan, Wednesday, Dec. 25, 2024. (The Administration of Mangystau Region via AP)
In this photo taken from a video released by the administration of Mangystau region, the wreckage of Azerbaijan Airlines Embraer 190 lies on the ground near the airport of Aktau, Kazakhstan, Wednesday, Dec. 25, 2024. (The Administration of Mangystau Region via AP)
