Eni CEO Says OPEC+ Moves Raise Oil Price Volatility
The OPEC+ group’s efforts to manage oil supply to the market are creating price volatility and reducing visibility for investment in new production, Claudio Descalzi, chief executive of Italy’s energy major Eni, said on Monday.
OPEC+ producers who are voluntarily curbing production and who planned to begin easing part of the output cuts beginning in December 2024, are now postponing the supply increase by a month, until January 2025, OPEC said on Sunday.
The news of the one-month delay was immediately registered in the oil market on Monday morning, with oil prices spiking by 3%, and WTI Crude returning to above $70 per barrel after settling below $70 on Friday.
The OPEC+ group was supposed to bring back some 180,000 barrels per day (bpd) in supply from December but it had conditioned that move on the price environment. If oil prices were right, they would bring back the supply. If prices remained depressed, as they have, the rollback would be pushed back.
“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.
While OPEC and the wider OPEC+ group including Russia and Kazakhstan, among others, continue to insist that their market-managing policy is aimed at “market stability”, the chief executive of Eni says these on-and-off extensions and easing of cuts hurt investments.
“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,” Descalzi said at the ADIPEC energy conference in Abu Dhabi.
“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, the executive said, as carried by Reuters.