Oil prices rise! OPEC+ takes its 'first step to pause output hikes': production to expand in December, then halt in Q1 next year

OPEC+ decided to increase output by 137,000 barrels per day (bpd) in December, and then pause its output hike plan in the first quarter of next year—injecting a stabilizing measure into the volatile crude market, prompting an immediate rise in oil prices. On Sunday, following an online meeting, OPEC+ announced that eight member countries, led by Saudi Arabia, would raise output by 137,000 bpd in December—the same increment as in October and November. However, the group simultaneously announced it would suspend output hikes from January to March next year, citing seasonal factors. This decision effectively hits the brakes on OPEC+’s output-increase plan. Over the past month, the crude market has experienced sharp volatility: oil prices plunged to near five-year lows amid concerns over oversupply, then rebounded sharply following new U.S. sanctions against Russia. After the announcement of the production-hike pause, oil prices rose: Brent crude briefly climbed above $65 per barrel, while WTI traded near $61 per barrel. Analysts view this move as both a concession to a weak market and a strategic pause amid uncertainty surrounding the impact of Russian sanctions. The International Energy Agency (IEA) forecasts a global crude supply surplus of 3.7 million bpd for the current quarter; JPMorgan estimates it at 3.6 million bpd. Balancing stability and output hikes This output-increase decision continues OPEC+’s gradual phase-out of production curbs. The group is unwinding approximately 1.65 million bpd in voluntary cuts introduced in 2023; another round of 2.2 million bpd in cuts had already been fully lifted one year ahead of schedule. Originally, OPEC+ cut output starting in 2023 to stabilize prices—but recently shifted strategy, aiming to recapture market share from U.S. shale producers, Brazil, and Guyana, while also reining in members that frequently exceed their production quotas.

OPEC+ maintains its plan to begin output hikes in December; Saudi Arabia warns: if production limits are violated, oil prices could fall to $50 per barrel

On Wednesday, major OPEC+ member countries held an online meeting to discuss whether to relax output restrictions. After the meeting, the group issued a statement saying the OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting had concluded, emphasizing the importance of achieving full compliance and compensating for past overproduction. OPEC+ made no changes to its output policy and maintained its plan to begin output hikes in December. The next JMMC meeting is scheduled for December 1. Russian Deputy Prime Minister Alexander Novak stated that OPEC+ remains committed to previously agreed production decisions and will continue closely monitoring evolving market conditions. Earlier the same day, media reports cited Saudi Arabia’s oil minister as issuing a fresh warning: if OPEC+ members fail to abide by agreed production limits, oil prices could plunge to $50 per barrel. According to OPEC delegates who attended the phone call, Prince Abdulaziz bin Salman, Saudi Arabia’s Minister of Energy, warned during last week’s teleconference that oil prices could fall to $50 per barrel if other producers do not comply with the agreed production-cut agreement. Saudi Arabia specifically named Iraq and Kazakhstan. According to S&P Global data, Iraq’s daily output exceeded its quota by 400,000 barrels in August. Kazakhstan’s output is set to rise as the Tengiz field—capable of producing 720,000 bpd—resumes operations. In fact, beyond the named countries, Russia’s output through July this year also exceeded its quota. One delegate said the message from Saudi Arabia was clear: increasing oil output makes no sense if there is no room in the market—and some producers should simply stop and honor their commitments to OPEC+. Other oil-producing nations interpreted Saudi Arabia’s latest remarks as an implicit threat: if others violate the group’s production-cut agreement, Saudi Arabia is prepared to launch a price war to protect its market share. The Saudi Ministry of Energy declined to comment when contacted. Industry consensus holds that Saudi Arabia needs oil prices of around $85 per barrel to support its domestic economic transformation. Historically, Saudi Arabia has waged oil price wars to penalize fellow producers. For example: In March 2020, Saudi Arabia launched an oil price war against Russia. During the pandemic, Saudi Arabia decided to raise oil output to a record high, causing oil prices to plummet 65% that quarter—to their lowest level in 17 years—with some expiring futures contracts even trading at negative prices for the first time in history. Oil prices fell below $10 per barrel in 1986—also triggered by Saudi Arabia’s output increase.

OPEC+ Set to Keep Production Targets Unchanged in December, Source Says

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Seven OPEC+ producers have agreed in principle to maintain production targets for December, according to a source. This decision signals continued stability in global crude oil supply.

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