OPEC+ has limited scope to boost oil production amid increasing U.S., Guyana supply, bp economist says

(Bloomberg) – OPEC+ has limited scope to boost production as that would put pressure on oil prices, given increasing supply from the U.S., Brazil and Guyana, according to bp Plc Chief Economist Spencer Dale.

“They will also be nervous about bringing oil back on because if they do so, the total supplies are growing more quickly than demand and that will lead to instability in the market,” Dale told reporters in New Delhi, adding that the decision is up to the group itself.

Global oil markets are poised to swing from a deficit to a surplus next quarter should OPEC+ proceed with provisional plans to bring back idled production starting in October, data last week from the International Energy Agency showed. The Organization of Petroleum Exporting Countries and its allies have been withholding supplies for almost two years to prop up prices.

However, crude has given up most of its gains this year as China’s lackluster economy countered OPEC+ supply cutbacks. That leaves the oil market divided over whether OPEC+ will unwind some of its production cuts.

Apart from demand, tensions in the Middle East, supply disruptions and weather conditions will determine oil prices next year, Dale said.