OPEC+ Poised for Another Small Boost in Crude Oil Production Targets
According to sources, OPEC+ is anticipated to come to an agreement on Sunday regarding a modest increase in oil production targets. This development arises as the producers’ group initiates efforts to adjust its strategies in response to concerns over an increasing supply glut and the need to regain market share. Since April, OPEC+ has raised their production targets by over 2.7 million barrels per day, amounting to approximately 2.5% of global supply. However, they have scaled back the rate of output increases in October and November due to larger increases in response to forecasts of an impending surplus.
Given that the United States and Great Britain have imposed new sanctions on major producers Rosneft and Lukoil, the latest measures from the West against Russia, a member of OPEC+, are compounding the challenges currently under discussion. Moscow could face challenges in boosting its output any further. According to three sources, Saudi Arabia, Russia, the United Arab Emirates, Iraq, Kuwait, Oman, Kazakhstan, and Algeria are among the eight members of OPEC+ anticipated to reach an agreement on Sunday to increase their output objectives for December by 137,000 barrels per day. Their decision to remain anonymous stems from the restrictions placed on them regarding media communication. A fourth source indicates that there is also the possibility of a halt in the increase in output.
On October 20, oil prices fell to a five-month low of around $60 per barrel, driven by worries that a surplus was developing. However, since then, oil prices have rebounded to over $65 per barrel, driven by sanctions imposed by Russia and a sense of optimism surrounding negotiations between the United States and its trading partners. This week, analysts from RBC, Rystad, Commerzbank, and SEB have stated their expectation that OPEC+ will raise their targets for December by 137,000 barrels per day. According to the three sources, the gathering on Sunday is scheduled for 1600.
OPEC+ had been reducing production for several years leading up to April, with the cuts peaking in March at a total of 5.85 million barrels per day. The reductions comprised three elements: voluntary reductions totaling 2.2 million barrels per day, reductions amounting to 1.65 million barrels per day by eight members, and a collective reduction of 4 million barrels per day by the entire group. The group has initiated the process of unwinding voluntary cuts, while the final segment of the reduction for the overall group is expected to remain in effect until the conclusion of 2026.
