Opec+ eight apply brakes to output rises

Eight core Opec+ members have put the brakes on their monthly production increases, giving them time to assess the impact of new US sanctions on Russia.

Saudi Arabia, Iraq, Kuwait, Russia, the UAE, Algeria, Oman and Kazakhstan will make one last production target increase worth 137,000 b/d in December before pausing the hikes in January-March.

The pause ends nine consecutive months of production target increases, during which the eight have fully unwound a 2.2mn b/d set of cuts and in October started to unwind another set of cuts worth 1.65mn b/d. The group has agreed to three monthly increases worth a combined 411,000 b/d up to December, leaving 1.24mn b/d to unwind.

The eight officially attributed the pause to "seasonality", referring to expectations of lower oil demand in the first quarter of 2026. But more importantly, the pause will allow them to gauge the impact of recent US sanctions on Russian oil producers Rosneft and Lukoil. Whether Russia can maintain its crude output and exports under the new restrictions remains uncertain. If Rosneft and Lukoil cannot find workarounds to the sanctions and buyers for their crude, they may have to start reducing production. In such an event, Opec+ may feel the need to step in to replace lost Russian output.

"I think everyone is monitoring the Russia sanctions and it's difficult for them to actually predict how those sanctions will go," trading firm Mercuria's chief executive Marco Dunand says. "I think they are pausing because there is a lot of oil on the water... I think it's about 60mn bl, but I'm not sure."

The eight countries said their decision reflects a "cautious approach", but they reiterated their "full flexibility" to accelerate, pause or reverse the monthly output hikes, depending on market conditions. "The group wants to adopt a more cautious approach, exactly like it did at the beginning of 2025, when it decided to delay the unwinding process of the initial 2.2mn b/d voluntary cut until April," one delegate told Argus.

No consensus

But views on the oil market remain sharply divided. The IEA forecasts a significant supply surplus in the fourth quarter and in 2026, while Opec expects a more balanced market, underpinned by strong demand this year and next.

Speaking at the Adipec conference in Abu Dhabi, UAE energy minister Suhail al-Mazrouei said he "can't see or justify" an oversupply scenario. "All of what we are seeing is more demand," he said.

European oil majors are also divided on market fundamentals. While Shell chief executive Wael Sawan sees a "highly credible scenario" for oversupply in 2026, BP and TotalEnergies have pushed back against a near-term oil glut, arguing that demand remains resilient and non-Opec+ supply growth is likely to taper off next year. "The determination of what happens really sits around three factors — Opec+ choices, China's stockpiling behaviour and the sanctions environment," BP chief executive Murray Auchincloss says.

Oil prices rebounded from multi-month lows of around $60/bl after the US unveiled its sanctions on 22 October, with Ice front-month Brent now around $65/bl. But this is still below where many Opec+ members would prefer.

Production by the eight members had increased by 2.1mn b/d in October from when they started unwinding their cuts in April, according to Argus estimates. Production by the 18 members of the alliance that adhere to output targets rose by 30,000 b/d on the month to 36.2mn b/d in October — the group's highest production since April 2023 (see table).

By Aydin Calik, Nader Itayim and Bachar Halabi