On November 2, OPEC+ said it would increase oil production by 137,000 barrels/day starting in December. However, the group announced that it will "temporarily suspend" oil supply in the first 3 months of 2026 and will closely monitor market conditions and maintain "completely flexibility" in deciding whether to continue to suspend production increases, even continue to cut production or not.
In the announcement, OPEC+ said that this suspension is "seasonal". In fact, demand for crude oil tended to decrease in the first quarter as refineries reduced production. "They don't want to add oil to a weak seasonal market," said Amrita Sen, director of market information at Energy Aspects.
The announcement also shows that OPEC+, which sells huge amounts of oil to major importers such as China and India, is seeing signs of a risk of supply glut next year.
"The group balances its own supply, and the group's supply balance is also showing an increase in the first quarter," said Ms. Amrita Sen.
Bachar El-Halabi, senior energy market analyst at research firm Argus Media, said that maintaining this policy "will certainly give the group a clearer view of the underlying market factors".
OPEC+ is operating in a complex context. There are concerns about future exports from Russia, a key supplier of the group, after the US recently sanctioned two Russian oil companies. Tensions are also rising between the US and Venezuela, a major oil producer.
On the other hand, there have been concerns that oil supply is increasing much faster than demand, potentially leading to a situation of uncontrollable excess.
The global oil market may be at a pivotal moment as there are signs of significant supply glories, said Toril Bosoni, head of the petroleum industry and markets division at the International Energy Agency (IEA).
Ms. Toril Bosoni said that OPEC+'s cancellation of the production cut-off agreement along with the continued increase in production by non-group countries, including the US, Canada and Guyana, will lead to a demand-excess situation of nearly 4 million barrels/day, equivalent to more than 4% by 2026.
The large gap between output and consumption is un acceptable and shows the possibility of some adjustments.
For example, OPEC+ could cut production, or lower oil prices could reduce production in the US and other producers, or sanctions on Russia, Iran or Venezuela could reduce supply.
