OPEC+ to Proceed with December Oil Output Increase Despite Compensatory Cuts by Members
According to two OPEC+ sources, the planned December oil output increase will move forward as scheduled, as the impact will be minimal if members who have overproduced follow through with larger cuts to offset their excess production. The Organization of the Petroleum Exporting Countries and its allies, including Russia, are set to raise output by 180,000 barrels per day in December as part of their strategy to gradually reverse recent output cuts.
In an effort to address overproduction, two OPEC+ members, Iraq and Kazakhstan, have committed to implementing additional cuts totaling 123,000 bpd in September, with further reductions planned for the coming months. Once the details of these compensation plans and production figures are confirmed for September, the anticipated December increase is expected to have minimal impact.
Recent reports suggest that Saudi Arabia is supportive of OPEC+ moving forward with the planned production increase on December 1, signaling a shift away from its previously unofficial $100 per barrel oil price target. Both OPEC and Saudi Arabia have maintained that they do not set price targets, instead making decisions based on market dynamics and the need to balance supply and demand.
It is important to note that the December output increase is not aimed at reclaiming market share, but rather at allowing a few countries to gradually phase out their voluntary output cuts. Top OPEC+ ministers are scheduled to convene on October 2 to assess the market situation, with no policy changes expected at that time.
Despite uncertainties in the oil market, Russian Deputy Prime Minister Alexander Novak confirmed that OPEC+ remains committed to beginning the process of scaling back oil production cuts starting in December. There is also a possibility of another meeting in November, according to a third OPEC+ source.