Amid Oversupply Concerns, Eight OPEC+ Countries Halt Production Increases for First Quarter of Next Year

Adjusting the Pace Amid Oversupply Concerns
IEA: "Oil Supply Could Exceed Demand by Up to 4 Million Barrels Next Year"

Eight countries belonging to OPEC+, a coalition of the Organization of the Petroleum Exporting Countries (OPEC) and major oil-producing nations, have decided to halt additional oil production increases in the first quarter of next year.

A model of an oil barrel engraved with the logo of the Organization of the Petroleum Exporting Countries (OPEC). Photo by Reuters Yonhap News

According to Bloomberg News on November 2 (local time), energy ministers from the eight countries held a virtual meeting that day, agreeing to increase oil production by 137,000 barrels per day in December, but not to expand output further from January to March next year, taking seasonal factors into account.

The December production increase is the same as in October and November, and is relatively small compared to the 547,000-barrel increase seen in August and September.

Saudi Arabia, Russia, Iraq, the United Arab Emirates (UAE), Kuwait, Kazakhstan, Algeria, and Oman-the eight countries-had previously implemented voluntary production cuts twice in 2023, independently of OPEC+ decisions.

Since April this year, they shifted to a production increase policy, fully reversing the 2.2 million barrel per day cut by September. During the meeting, they also reaffirmed that the additional cut of 1.65 million barrels per day could be partially or fully restored depending on market conditions.

This decision comes amid growing concerns about an oversupply of crude oil. Some observers have suggested that Russia may find it difficult to further increase production due to U.S. sanctions against the country.

The International Energy Agency (IEA) has projected that global oil supply could exceed demand by up to 4 million barrels per day next year, which is about 4% of total global demand. The price of West Texas Intermediate (WTI) crude oil has fallen by more than 15% since the beginning of this year. The 22 OPEC+ member countries are scheduled to meet again on the 30th to discuss potential adjustments to next year’s production quotas.