Bloomberg News

Even before OPEC+ ministers start tomorrow’s meeting on oil production, traders are looking beyond it.

For the past week, the cartel led by Saudi Arabia and Russia has been holding preliminary talks to once again delay plans for reviving halted barrels.

The group is firming up an agreement — to be finalized at Thursday’s gathering — that would push back a sequence of monthly hikes from January until the second quarter.

Unfortunately for the alliance, crude traders already assumed the pause was unavoidable and have priced it in. Benchmark Brent futures have barely budged in the week since OPEC+ began negotiations, hovering around $74 a barrel.

That could be complacency: The Saudis have a habit of springing bullish surprises to deter short sellers.

Nonetheless, investors are looking past the decision, focusing on oil-market conditions in early 2025 — and those don’t augur well for prices.

Global demand growth is cooling as top consumer China falters, while supplies from the US, Guyana and Canada are booming, according to the International Energy Agency. A hefty surplus looms, even if OPEC+ doesn’t add a single barrel next year.

The Organization of Petroleum Exporting Countries and its partners have already twice postponed their road map for restoring 2.2 million barrels a day in monthly tranches. Further delays may strain the group’s cohesion.

Analysts increasingly wonder whether OPEC+ will eventually throw in the towel.

The United Arab Emirates appears eager to deploy new production capacity, driving up exports last month to the highest in seven years. “They don’t want to collapse the price,” Bank of America Corp. notes, but “patience is running a little thinner than it used to.”

Even Iran — one of OPEC’s founding members — acknowledged last week that the cartel’s strategy has proved self-defeating as the pursuit of higher oil prices finances an endless tide of rival supply.

As brokers PVM Oil Associates Ltd. write today: “One cannot help but ponder how long the organization and its members are willing to sacrifice market share” for “a seemingly dubious, and chiefly ineffective, project.”

–Grant Smith, Bloomberg News