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 in a video conference to revive 137,000 barrels a day next month, matching the increases scheduled for October and November. A hiatus will then occur from January to March.
The decision to pause from January reflects expectations of a seasonal slowdown, as the first quarter is typically a period of weaker demand. However, this pause also coincides with a period of uncertainty for oil traders. Sanctions imposed on Russia, a co-leader of the Organisation of the Petroleum Exporting Countries and its allies, have raised questions about Moscow’s supply prospects. Traders are also noting a growing surplus that is expected to increase into next year.
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.” Although sanctions on Russia initially supported prices after they fell to a five-month low, one delegate mentioned it was premature for OPEC+ to fully assess the overall market impact of these measures.
The January-to-March pause marks the group’s first break from adding barrels since it began rapidly restoring halted supplies in April. This decision reflects the group’s effort to balance market share ambitions with concerns about an emerging surplus and the impact of geopolitical events on global oil supply.
