Oil prices have seen a slight increase following OPEC’s announcement that it will pause production increases through the first quarter of 2026. This decision comes in response to growing uncertainty surrounding Russian oil supplies and escalating geopolitical tensions. According to ANZ analysts, OPEC met over the weekend for its monthly review and decided to maintain a steady output for at least three months, following a 137,000 barrels a day increase in December. OPEC is an intergovernmental organisation of 13 countries, which coordinates and unifies the petroleum policies of its member countries. It ensures the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers.
The move by OPEC follows the imposition of new US sanctions on Rosneft and Lukoil, two of Russia’s largest oil producers. These companies collectively export approximately 3 million barrels a day, representing more than half of Russia’s crude and condensate supply. Further exacerbating supply concerns, a Ukrainian drone strike targeted a tanker in the Black Sea and damaged loading facilities in Tuapse, leading to a halt in refinery intake at the Russian port.
During an industry conference in Abu Dhabi, TotalEnergies CEO Patrick Pouyanné commented that the sanctions would likely cause delays in cargo shipments and slow down global trade. Similarly, BP chief Murray Auchincloss cautioned that the restrictions have already begun to negatively impact supply chains. BP is a global energy company with wide operations including oil and gas exploration and production, refining, and trading. It is also investing in renewable energy sources.
ANZ analysts noted that expectations of a substantial surplus had already been factored into the market. Therefore, OPEC’s decision to temporarily halt output growth is expected to provide some support to prices in the near term. “OPEC is aware of the impact its rising output will have on the market and will remain flexible so that the market remains balanced,” they stated.
