Oil Prices Set To Jump After OPEC+ Raises Output By Far Less Than Expected

OPEC+ will raise oil output from November by 137,000 barrels per day, it said on Sunday, opting for the same fairly modest monthly increase as in October and far less than the 500k+ speculated by the Bloomberg “source” who continues to be short oil and appears to buy every dip. 

The group consisting of the Organization of the Petroleum Exporting Countries plus Russia and some smaller producers has increased its oil output targets by more than 2.7 million bpd this year – equating to about 2.5% of global demand – as it continues the return of 1.65 million barrels a day they cut in April 2023.

The process of unwinding the April 2023 cuts began last month, when they raised their collective target by an initial 137,000 barrels a day with effect from October. The month before they had completed the return of 2.2 million barrels of output, cut in November 2023, a year ahead of schedule. The eight countries will continue to meet monthly, with the next gathering scheduled for Nov. 2.

Following Sunday’s meeting, the new production targets for the eight countries for November are shown in the table below in thousands of barrels a day alongside their limits for August, September and October and their actual production in August, as reported by OPEC’s secondary sources.

The table above does not reflect additional cuts to compensate for earlier over-production that have been made by several countries. Those compensation cuts, most recently revised on Oct. 1, reduce the effective output targets to those shown below.

Brent prices fell below $65 per barrel on Friday, as most analysts predict a supply glut in the fourth quarter and in 2026 due to slower demand and rising U.S. supply. Prices are trading below this year’s peaks of $82 per barrel but above $60 per barrel seen in May.

In the run-up to the meeting, Russia and Saudi Arabia, the two biggest producers in the OPEC+ group, had different views, Reuters sources said.

Russia was advocating for a modest output increase, the same as in October, to avoid pressuring oil prices and because it would struggle to raise output owing to sanctions over its war in Ukraine, two sources said this week. Saudi Arabia would have preferred double, triple or even quadruple that figure – 274,000 bpd, 411,000 bpd or 548,000 bpd respectively – because it allegedly has spare capacity and wants to regain market share more quickly.

OPEC views the global economic outlook as steady and market fundamentals as healthy because of low oil inventories, it said in a statement on Sunday.

Scott Shelton at TP ICAP Group told Reuters that oil prices may rise on Monday by up to $1 per barrel as the November production increase turned out to be modest.

Jorge Leon at Rystad Energy said: “OPEC+ stepped carefully after witnessing how nervous the market had become … The group is walking a tightrope between maintaining stability and clawing back market share in a surplus environment.”

OPEC+ output cuts had peaked in March, amounting to 5.85 million bpd in total. The cuts were made up of three elements: voluntary cuts of 2.2 million bpd, 1.65 million bpd by eight members and a further 2 million bpd by the whole group.

The eight producers plan to fully unwind one element of those cuts – 2.2 million bpd – by the end of September. For  October, they started removing the second layer of 1.65 million bpd with the increase of 137,000 bpd. The eight producers will meet again on Nov. 2.