OPEC+ expected to approve modest output hike amid oversupply concerns

[Oil tanker ship. Red Oil Tanker runing in the ocean sea. petroleum ship transportation import export fuel energy across red ocean sea. Vessel transport Gas to customs]
Suphanat Khumsap

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are expected to sign off on a small increase in oil production targets during their virtual meeting on Sunday, Reuters reported, citing three individuals familiar with the ongoing discussions.

The group appeared set to proceed cautiously, balancing efforts to regain market share with growing fears of an impending surplus in global supply.

Since April, OPEC+ has lifted its production targets by more than 2.7 million barrels a day, roughly 2.5% of total global output. However, the pace of those increases has slowed in recent months, with smaller adjustments in October and November as forecasts of oversupply gained traction.

Negotiations have been complicated by new Western sanctions against Russia, one of the bloc’s leading producers. The United States and United Kingdom have introduced additional restrictions on companies such as Rosneft and Lukoil, potentially limiting Moscow’s ability to expand production further.

Eight key members (Saudi Arabia, Russia, the United Arab Emirates, Iraq, Kuwait, Oman, Kazakhstan and Algeria) have reached a preliminary agreement to lift December output targets by 137,000 barrels a day, Reuters reported, citing its sources. The proposal is expected to be swiftly approved when ministers meet at 1600 GMT (11 a.m. EST) on Sunday.

Crude prices, which slid to around $60 a barrel in late October amid oversupply fears, have since rebounded to about $65. The recovery has been supported by renewed sanctions on Russian exports and optimism surrounding U.S. trade negotiations.

OPEC+ previously spent several years cutting production to stabilize markets, with reductions peaking in March at a total of 5.85 million barrels a day. These cuts included 2.2 million in voluntary reductions, 1.65 million from eight participating members and a further 2 million across the wider group. While voluntary curbs have been gradually rolled back, the broader 2 million barrel-a-day cut is expected to remain in place until the end of 2026, Reuters reported.

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