LONDON/Moscow, Nov 2 (Reuters) - OPEC+ has reached an agreement to implement a modest increase in oil output for December while pausing any further increases in the first quarter of next year. This decision comes as the producers' group aims to manage its strategy to regain market share amid escalating concerns about a potential oversupply in the oil market. Since April, OPEC+ has raised its output targets by approximately 2.9 million barrels per day, which represents about 2.7% of global supply. However, the pace of these increases has slowed since October due to predictions of an emerging supply glut.
The recent imposition of new Western sanctions on OPEC+ member Russia poses additional challenges to the group's strategy. Moscow is likely to encounter difficulties in ramping up its oil output further, especially following the new restrictions placed on major producers like Rosneft and Lukoil by the U.S. and Britain. During the latest monthly meeting held on Sunday, representatives from the eight OPEC+ countries—Saudi Arabia, Russia, the United Arab Emirates, Iraq, Kuwait, Oman, Kazakhstan, and Algeria—decided to increase December’s output targets by 137,000 barrels per day, mirroring the increments set for October and November.
Looking beyond December, the group has opted to pause production increases during the months of January, February, and March 2026. This decision aligns with seasonal trends, as historically, the first quarter tends to be the weakest period for oil demand and supply balances. By choosing to pause, OPEC+ is demonstrating its commitment to proactively manage the market and safeguard oil prices.
Oil prices recently dipped to a five-month low of around $60 per barrel on October 20 due to fears of a developing supply glut. Nevertheless, prices have since rebounded to approximately $65 per barrel, influenced by the impact of Russian sanctions and optimistic negotiations involving U.S. trade partners. According to Jorge Leon from Rystad, OPEC+ is making a "calculated blink" by pausing its production increases, as it recognizes that overproduction could have negative consequences in the future.
Amrita Sen from Energy Aspects noted that the decision to pause production increments reflects OPEC+'s proactive market management strategy. Giovanni Staunovo from UBS commented that oil prices are unlikely to see significant movement when trading resumes on Monday, as the modest increase in December production had been largely anticipated by market analysts.
Historically, OPEC+ had been implementing output cuts for several years until April, with the most significant reductions peaking in March at 5.85 million bpd. These cuts comprised voluntary reductions of 2.2 million bpd, 1.65 million bpd by eight members, alongside an additional 2 million bpd from the entire group. While OPEC+ has been gradually unwinding these voluntary cuts, the last component of the overall cuts is expected to remain in effect until the end of 2026.
The eight OPEC+ members are scheduled to convene again on November 30, coinciding with a full OPEC+ meeting, where further discussions regarding production strategies and market conditions are anticipated.
