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OPEC+ limits output for now as fears of an oil glut increase

Sources within the group stated that OPEC+ countries chose to only increase their November production modestly due to fears of a global glut. Non-OPEC oil supply is also increasing while fuel demand growth is slowing.

The group announced on Sunday that it would increase its monthly production by 137,000 barrels a day in November. This is a continuation of the increases begun in April.

Three OPEC+ source said that was the smallest option the group had discussed. They cited concerns over an upcoming surplus.

OPEC declined comment. The Saudi Arabian government did not reply to a comment request.

Jorge Leon, a former OPEC employee and Rystad Energy executive, said that "OPEC+ stepped cautiously after seeing how nervous market was becoming."

Brent benchmark oil prices dropped 8% last week to less than $65 per barrel after media reports that OPEC+ would consider higher increases.

Brent is now trading at $60-$70 per barrel since OPEC+ started its production increases in April. This compares to $82 per barrel at the beginning of 2025.

Leon added that the oil market's futures structure for monthly also changed last week. This could indicate possible oversupply and may have influenced OPEC+ decisions.

Brent's immediate price premium over six month futures The price of a litre of petrol fell to 39 cents - the lowest since May. When supply exceeds demand, premiums tend to fall.

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The group claims that its market strategy is driven not by oil price targets, but fundamental factors of supply and demand.

Sources familiar with OPEC+ talks say that Saudi Arabia, the leader of OPEC+, is de facto prioritising regaining share on rival producers.

The OPEC+ group's planned production increases from April to November total more than 2.7 millions barrels of oil per day or 2.5% global demand. However, the group has not been able to reach them in full.

Data and analysts have shown that OPEC+ is on track to reach about 75% of its goal, as the majority of producers are already at capacity.

The extra supply has been absorbed by China's stockpiling and the summer fuel demand.

Many analysts believe that the market will face a surplus in the coming months as the summer driving period and the autumn harvest of the northern hemisphere ends, and as supply from OPEC+ and non-OPEC producers such as the United States and Brazil increases.

Paris-based International Energy Agency forecasts a surplus of twice that amount in 2026 - 3.3 millions bpd.

Calculations show that OPEC's most recent forecasts indicate a 700 000 bpd shortfall for 2026 if it maintains its output at the same level as August.

Since August, OPEC's output quotas have already been raised by 821,000 bpd.

JP Morgan reported that the global oil and liquids inventories - including crude oil stored on water - have increased every week during September. 123 million additional barrels were added in this month.

China accounted for over a third of global liquid inventory growth in the first nine-month period.

JP Morgan stated that the increase in Middle Eastern crude exports and Russian crude imports in September will contribute to the surplus.

Kpler reported that oil exports from Russia and Saudi Arabia, Iraq, the UAE, Kuwait, Oman, and Oman increased by 1.3m bpd compared to August.

Analysts polled said that it is difficult to predict future disruptions in Russian exports because of sanctions, Ukrainian attacks and China stockpiling. These factors could lead to a tightening of supply and a rise in demand.

(source: Reuters)