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Opec+ has responded to fears of an oil glut by pausing its plans to increase production next year.
Eight members of the oil producers’ group said they would add another 137,000 barrels a day of crude in December, but then halt any further rises in January, February and March.
The group said the pause was due to “seasonality”. Oil demand in the first quarter is generally weaker after the end of the holiday season when oil refineries often go into maintenance.
The eight Opec+ countries, led by Saudi Arabia and Russia, have steadily increased their production quotas this year, by 2.91mn b/d including next month’s rise, equivalent to about 2.7 per cent of global oil demand. But they have slowed the pace in recent months.
December’s planned increase follows a small rise in October and November as producers respond to forecasts of an oil glut next year.
Last week, Wael Sawan, Shell’s chief executive, became the latest industry boss to cite the risk, saying “there is a credible scenario of oversupply in the market next year”.
The small increase in December also suggests Opec+ is not anticipating that large volumes of Russian oil will be removed from the market in the near term by the latest round of US sanctions.
At the end of October, the US imposed sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, and secondary sanctions on any financial institutions that do business with them.
Oil prices, which had fallen to a five-month low of around $60 a barrel ahead of the sanctions, rose to $65 in response.
Energy Aspects, a research company, estimated that between 1.4mn and 2.6mn b/d of Russian crude could be affected by the sanctions, with India’s imports being the worst hit.
But the market remains sceptical that the sanctions will seriously impede the flow of Russian oil, given the extensive structures that Moscow has built since 2022 to work around attempts to control its exports.
Jorge León, head of geopolitical analysis at Rystad Energy, a research company, said it remained too early to tell how serious the effect of the sanctions would be.
“Crude export numbers look steady, but that is because that crude was produced a month ago or so. In reality, exports will start showing some signals in three to four weeks,” he said. “But the Russians are very worried.”
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