OPEC+ confirmed on Sunday it will raise oil output by 137,000 barrels per day in November, sticking to the same modest monthly increase as October even as warnings of a supply glut build.
The coalition of the Organization of the Petroleum Exporting Countries, Russia, and several smaller producers said this decision brings its total output increases for 2024 to over 2.7 million barrels per day, equal to about 2.5% of global demand.
This is a sharp policy change after years of deep production cuts and reflects the group’s push to grab back market share from U.S. shale producers.
Oil traders had already reacted to the news last week. Brent crude futures settled up 42 cents, or 0.7%, at $64.53 a barrel, while U.S. West Texas Intermediate gained 40 cents, or 0.7%, to $60.88.But for the week, Brent plunged 8.1%, its biggest drop in over three months, and WTI fell 7.4%.
Prices remain below this year’s high of $82 per barrel but are still above the $60 level seen in May. These swings show how sensitive the market has become to OPEC+ signals, especially with a possible supply glut looming in the fourth quarter.
Russia and Saudi Arabia clash over production numbers
Before the meeting, Russia and Saudi Arabia, the top two producers in OPEC+, disagreed over how aggressive the output hike should be. Reuters claims that Russia supported keeping the increase at 137,000 barrels per day, just like October, because its sanctions over the war in Ukraine limit how much more oil it can pump.
By contrast, Saudi Arabia wanted to go far bigger, pushing for numbers such as 274,000 barrels per day, 411,000 barrels per day, or even 548,000 barrels per day. According to Reuters, Riyadh has enough spare capacity to boost exports and wants to recover market share faster.
OPEC+ said in its Sunday statement that it still sees the global economy as steady and market fundamentals as healthy, pointing to low oil inventories as support for its view.But analysts said the group was forced to “step carefully” because of market nervousness.
Jorge Leon at Rystad Energy said OPEC+ was “walking a tightrope between maintaining stability and clawing back market share in a surplus environment.” Scott Shelton at TP ICAP Group said prices might rise by as much as $1 per barrel on Monday thanks to the restrained November hike.
OPEC+ unwinds past cuts and prepares for next meeting
This November increase is part of a larger unwinding of the 5.85 million barrels per day of output cuts OPEC+ had in place at its peak. Those cuts had three parts: voluntary cuts of 2.2 million barrels per day, 1.65 million barrels per day by eight members, and another 2 million barrels per day from the full group.
The eight producers fully ended the first element of cuts, 2.2 million barrels per day, by the end of September. In October, they started peeling back the second layer of 1.65 million barrels per day with the same 137,000 barrels per day increase now extended into November.
The eight producers in the core of the group will meet again on November 2 to decide how much more of the remaining cuts to unwind. That meeting will be closely watched by traders and governments alike as OPEC+ tries to balance its desire for more revenue and market share with the risk of pushing prices lower.
