OPEC+ to keep production policy steady as capacity debate takes center stage

Dubai: OPEC+ is heading into another round of meetings this weekend with delegates expecting no last-minute surprises. Officials say the group is likely to stick with its earlier decision to pause planned output increases in early 2026, reflecting concerns about a growing glut and weakening prices.

The gathering will be held online, with several delegates — who asked not to be identified because the talks are private — describing it as “straightforward.” Brent crude is trading near $63 a barrel, a level that has already put pressure on oil-reliant economies within the group.

The pause follows months of volatility across energy markets, driven by rising global supply and slower-than-expected demand growth. OPEC+ officials have repeatedly warned that oversupply early next year could send prices lower.

A major focus this weekend will be a long-term review of each member’s “maximum sustainable capacity” — the volume a country can produce consistently without damaging its oil reservoirs.
This review matters because several countries have struggled to reach their official production targets, raising questions about whether their stated capacities match real-world output.

When quotas are set above true capacity, markets question whether cuts are voluntary or simply unavoidable. Clearer numbers help OPEC+ set realistic targets for 2027 and strengthen the credibility of any future supply curbs.

The topic is sensitive. Capacity claims reflect national ambitions, investment levels and political messaging. Some producers want their capacity raised to secure larger future quotas, while others face ageing oil fields, limited investment or conflict-related constraints.

Saudi Arabia remains the group’s strongest producer with meaningful spare capacity — the ability to quickly raise output when needed.
The UAE, after spending heavily to expand production capability, wants those gains formally recognised in the new review.

Iraq has also pushed for higher quotas but continues to struggle with infrastructure bottlenecks and political disruptions that restrict flows.
Russia’s longer-term outlook is uncertain as sanctions and shipping restrictions limit its ability to maintain or expand exports.

To add objectivity, OPEC+ has hired independent consultancies to conduct the reassessment. Previous reviews were carried out by Wood Mackenzie and IHS Markit (now part of S&P Global). Their findings often determine how quotas are allocated for years.

While output for early 2026 is already set, the meeting comes at a volatile moment.
US President Donald Trump is pushing for a possible Ukraine peace deal that, if successful, could eventually allow more Russian oil onto global markets — potentially reshaping supply dynamics.

The OPEC+ alliance surprised traders earlier this year when it abruptly restarted some halted production. Officials described the move as an attempt to defend global market share, but it added uncertainty during a period of rising inventories.

The group will hold four meetings on Sunday, including a session for the eight members who adjust production monthly. Analysts say any new signals on capacity, quotas or future cuts could influence prices into the first quarter.

The International Energy Agency expects the first quarter of 2026 to show one of the largest supply surpluses in recent years. The agency forecasts inventories could expand by up to 5 million barrels per day, a level that would put additional downward pressure on prices.

A glut of that size would make OPEC+’s pause look increasingly cautious — and possibly insufficient without further action. Financial institutions such as JPMorgan have already warned the group may need fresh cuts in 2026 to prevent prices from sliding into the $40s.

Eight OPEC+ members involved in monthly adjustments have already agreed to hold off on further increases next quarter to avoid accelerating the surplus. Analysts say geopolitical risks — from Russian sanctions to constraints on Venezuelan exports — are also shaping the group’s restraint.

Market strategists say OPEC+ is likely to remain cautious until it has a clearer picture of global demand, US interest-rate trends and the trajectory of non-OPEC supply, including US shale.

“We continue to contend that OPEC will stick with a watch-and-wait approach until there is more clarity,” said Helima Croft, head of commodity strategy at RBC Capital Markets.

While the upcoming meeting may not deliver major shifts, the assessments made this weekend will influence how OPEC+ manages the market for the remainder of the decade. With capacity disputes unresolved and inventories rising, the alliance’s next moves will be closely watched.