Understanding the Market | COSCO SHIPPING Energy rose over 10% in early trading as OPEC+ accelerates production to compete for market share, benefiting the continued growth of oil transportation demand

COSCO SHIPPING Energy rose over 10% in early trading. As of the time of writing, it is up 9.31%, priced at HKD 8.45, with a trading volume of HKD 355 million. In terms of news, the OPEC+ oil-producing countries alliance held a meeting over the weekend and announced an increase in crude oil production by 137,000 barrels per day in October, indicating that OPEC+ is beginning to lift the second layer of production cuts. The lifting time is more than a year earlier than originally planned. Previously, media reports indicated that OPEC+ leader Saudi Arabia is pushing the organization to consider restoring more oil production to regain market share. Cathay Securities pointed out that the reaffirmation of crude oil production increases is beneficial for the continued growth of oil transportation demand. In the first half of 2025, OPEC+ will accelerate production increases, but the benefits may not materialize as expected, due to increased domestic sales in the Middle East offsetting production increases and the shift of exports from the Gulf of Mexico to Europe shortening shipping distances. Considering the end of the peak season for domestic demand in the Middle East and increased exports, as well as production increases on long routes from South America, it is suggested that the benefits of increased production may gradually manifest in the second half of the year, which will support the Q4 peak season performance, and the industry is optimistic. According to CNBC, Saudi Arabia hopes OPEC+ will continue to accelerate production increases to regain market share and hedge against falling oil prices. We believe that if implemented, it will further benefit the growth of oil transportation demand