China, which remains the world's largest oil importer, is facing economic pressures that are stifling demand. Despite some signs of recovery post-pandemic, the country’s economic challenges—including a slowdown in its property sector and shifts toward renewable energy—have led to a significant downturn in its oil needs. The drop in demand from China, combined with weaker consumption in other key markets such as the U.S., has created a bearish sentiment in the global oil market.
In response, OPEC+, led by Saudi Arabia, has taken a cautious stance, delaying planned production increases in an effort to prevent oversupply and stabilize prices. The production cuts and the deferral of increases highlight a strategy to avoid a repeat of previous price wars, which have destabilized the market in the past. Analysts have pointed out that without this restraint, oil prices could have dropped below $70 per barrel.
Saudi Arabia has kept its exports below 6 million barrels per day in recent months, further emphasizing its commitment to managing global supply. This decision aligns with OPEC+'s broader strategy of maintaining tight market conditions to support prices, even as demand remains sluggish.