Oil prices have increased following OPEC+’s decision to suspend production hikes in the first quarter of next year. The move comes after the group agreed to a small oil output increase for December.
Brent crude futures rose by 24 cents, or 0.37%, to $65.01 a barrel, while U.S. West Texas Intermediate crude was at $61.19 a barrel, up 21 cents, or 0.34%. This development is a result of OPEC+’s monthly meeting, where eight member countries, including Saudi Arabia, Russia, and the United Arab Emirates, decided to increase December output targets by 137,000 barrels per day.
The group has been moderating its plans to regain market share due to rising fears of a supply glut. Since April, OPEC+ has raised output targets by around 2.9 million barrels per day, but slowed the pace from October amid predictions of a looming oversupply. New Western sanctions on OPEC+ member Russia are adding to the challenges in the strategy, as Moscow may struggle to further raise output after the U.S. and Britain imposed new measures on top producers.
Oil prices had fallen to a five-month low of about $60 a barrel on October 20 due to concerns that a glut was building. However, they have since recovered to about $65 a barrel due to Russian sanctions and optimism over U.S. talks with trade partners. OPEC+ had been reducing output for several years until April, with cuts peaking in March at 5.85 million bpd in total.
The group has been unwinding voluntary cuts, while the last element of the cuts for the whole group is meant to stay in place until the end of 2026. Eight OPEC+ members will meet again on November 30, the same day as a full OPEC+ meeting, to reassess their strategy. This decision by OPEC+ is significant, as it aims to balance the global oil market and stabilize prices. The outcome of the upcoming meeting will be closely watched by the industry, as it may impact the direction of oil prices in the coming months.
