OPEC+ has decided to pause output increases during the first quarter of next year, following another modest hike in December. Key members, led by Saudi Arabia, agreed to revive 137,000 barrels a day next month, which matches the increases scheduled for October and November. A hiatus will then be implemented from January to March. The decision reflects an expectation for a seasonal slowdown in demand during the first quarter.
The pause also coincides with a period of uncertainty for oil traders. Sanctions on Russia, a co-leader of OPEC+, have raised questions about Moscow’s supply prospects. Simultaneously, traders have noted a growing surplus, which is expected to increase further into next year. This complex situation has led to a cautious approach by the oil-producing nations.
Helima Croft, head of commodity strategy at RBC Capital, described the pause as “certainly another plot twist, but I think a prudent one given the supply picture uncertainty for the first quarter.” The sanctions on Russia initially helped support prices after they fell to a five-month low. However, one delegate noted that it was still too early for OPEC+ to accurately assess the overall market impact of these measures.
The January-to-March pause marks the group’s first break from adding barrels since they began rapidly restoring halted supplies in April. This decision underscores the organisation’s intent to balance its pursuit of market share with concerns about an emerging surplus and the ongoing impacts of geopolitical events on the global oil market.
