Ongoing conflict in the Middle East continues to hold down a substantial portion of the alliance's production capacity, and leading OPEC+ member nations have reaffirmed their plan to leave the December oil output quota unchanged.
A statement issued after Sunday's online meeting indicated that the seven-nation group led by Saudi Arabia and Russia will maintain its existing production targets. The decision is consistent with the roadmap announced earlier this year.
Last week, London crude futures climbed to $118 per barrel as traders priced in the risk of further escalation in the Middle East around Israel's election and the U.S. midterm elections.
At the same time, the physical market is showing signs of softening. Despite the ongoing conflict, crude shipments through the Strait of Hormuz have recovered to near pre-war levels, and spot crude prices have pulled back.
The Organization of the Petroleum Exporting Countries and its allies had previously stated that after modest output increases over the six months through August, they would pause further quota hikes through the end of this year.
Because of the Iran conflict, production capacity in the Persian Gulf has been constrained, making most of those increases largely symbolic. In theory, the increases offset the cuts implemented in 2023, and once the conflict eases, Gulf member states will have greater room to raise output.
OPEC+'s next major decision will determine whether to restore another batch of paused production from 2022. That process is relatively complex and may depend on the results of an ongoing audit of member countries' production capacity.
Next year's policy will be finalized at the full ministerial meeting on November 29.
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