OPEC+ plans another oil output hike in November: sources
News Summary
OPEC+ is likely to approve another oil production increase of at least 137,000 barrels per day for November at its meeting next Sunday, sources familiar with the talks said. This follows a reversal of its output cut strategy since April, during which quotas have already been raised by over 2.5 million bpd, aiming to regain market share and in response to pressure from US President Trump to lower oil prices. Eight OPEC+ countries will hold an online meeting on October 5 to decide on November's output. Oil prices have fallen from over $80 per barrel at the start of the year but have largely traded in a narrow range of $60-$70 per barrel since the production increases began in April. Recently, prices rose above $70 per barrel, supported by Ukrainian drone attacks on Russia’s energy infrastructure. OPEC+'s peak output reductions amounted to 5.85 million bpd. One element of 2.2 million bpd in voluntary cuts is set to be fully unwound by the end of September. For October, a second layer of 1.65 million bpd began to be removed with an increase of 137,000 bpd. The UAE was also approved to boost production by 300,000 bpd between April and September. Analysts note that OPEC+ hikes have often fallen short of pledged amounts as most members are pumping at capacity. A third group-wide layer of 2 million bpd cuts is scheduled to last until the end of 2026.
Background
OPEC+ is an alliance of oil-producing countries, including the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, responsible for approximately half of the world's oil output. The group had previously implemented significant production cuts, reaching a peak of 5.85 million barrels per day, to stabilize the market and support prices. However, since April 2025, OPEC+ has been gradually reversing these cuts, partly driven by a desire to regain market share and in response to political pressure from the US President Trump administration to lower oil prices. While international oil prices have generally traded in the $60-$70 per barrel range, recent Ukrainian drone attacks on Russian energy infrastructure have led to supply disruptions and a subsequent rise in oil prices.
In-Depth AI Insights
What are the deeper strategic motives behind OPEC+'s continued output hikes, beyond merely regaining market share and responding to US pressure? * Global Oil Price Stabilization for Long-Term Demand Preservation: OPEC+ may be seeking to balance immediate market needs with the imperative to prevent extreme price spikes. Excessively high oil prices could accelerate the global transition to renewable energies, thereby eroding their future market base. * Internal Cohesion and Budgetary Requirements: Member states with spare capacity may be facing greater fiscal pressures, pushing for higher quotas to meet national budgetary needs. Consistent production increases can alleviate these internal strains and prevent fractures within the alliance. * Geopolitical Bargaining with the Trump Administration: Satisfying US President Trump's demand for lower oil prices might not solely be an economic calculation. It could represent a short-term geopolitical trade-off, potentially securing tacit approval or support from the Trump administration in other areas, such as military backing, trade policies, or flexibility on Iranian sanctions. Given that OPEC+ members often pump at capacity, what does this limitation imply for the global energy market, and how should investors interpret it? * Limited Downside for Oil Prices: If OPEC+ cannot fully deliver on its pledged increases due to capacity constraints, the global market will remain exposed to tight supply risks. This sets a relatively firm floor for oil prices, limiting the potential for significant declines. * Exacerbated Geopolitical Risk Premium: Capacity limitations mean that any new supply disruptions (such as Ukrainian attacks on Russian infrastructure) will have an amplified effect on the market, as there is less buffer capacity to quickly compensate. Investors should continue to monitor geopolitical events as primary drivers of oil prices. * Investment Opportunities in Specific Producers: Non-OPEC+ producers with spare capacity and the ability to respond quickly to market demand (e.g., certain US shale producers) may stand to benefit, potentially seeing their stock performance outperform peers. Amid current production increases, what are the true intentions and credibility of OPEC+'s commitment to maintain 2 million bpd in cuts until the end of 2026? * Long-Term Market Management Tool: Despite short-term increases, the commitment to cuts until 2026 can be viewed as a long-term market management tool, providing flexibility for potential future oversupply or demand shocks. This indicates OPEC+ is maintaining strategic control while making tactical adjustments. * Hedge Against Non-OPEC+ Production Growth: This commitment might also serve as a hedge against future non-OPEC+ production growth, such as a resurgence in US shale or the commissioning of new projects. By pre-setting cuts, OPEC+ can rebalance the market if necessary. * Credibility Challenges: Given OPEC+'s complex history of quota compliance and the divergent economic interests of its members, the credibility of this commitment will depend on market dynamics and internal cohesion over the next two years. Investors should be wary of potential premature adjustments based on changing market conditions.