Saudi Arabia, Russia, and six other OPEC+ members are expected to approve a modest increase in oil production during their online meeting. The decision aims to strengthen the group’s market share amid rising global competition.
Analysts predict a slight output hike from the “Voluntary Eight” (V8) countries, which include Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman. Since April, the V8 group has increased production by roughly 2.7 million barrels per day.
Emily Ashford, an energy analyst at Standard Chartered, expects a 137,000 bpd rise in December, similar to last month’s decision. She noted that OPEC+ has accelerated output faster than anticipated, after years of production cuts designed to support oil prices.
However, growing competition from US shale oil producers has made expanding market share a top priority. Ole Hvalbye, commodities analyst at SEB Bank, said the strategy is “working to a certain degree.” He added that US shale supply has plateaued, with limited investment in new production.
The V8 group is likely to cite low global oil inventories to justify a further increase in quotas. According to the US Energy Information Administration, US crude inventories recently fell sharply, keeping Brent crude prices steady around $65 per barrel.
Despite this, rising supply has surprised some analysts. Hvalbye noted that volumes at sea have surged, even exceeding levels seen during the Covid pandemic. Adding more barrels could risk price drops, which would affect profits.
On the other hand, Ashford explained that not raising quotas could signal a lack of market confidence, which might trigger investor panic. She added that a 137,000 bpd quota increase would likely result in lower actual production, limiting the impact on prices.
Looking ahead, some V8 members must offset previous overproduction, and Russia is reportedly at full capacity. In late October, US sanctions targeted Russian oil giants Rosneft and Lukoil, increasing pressure on supply.
The impact of these sanctions remains uncertain. It will depend on how strictly Washington enforces secondary restrictions on foreign financial institutions dealing with the two companies. Patrick Pouyanné, CEO of TotalEnergies, said any reduction in Russian supply could support global prices.
Nevertheless, analysts caution that Russia has successfully circumvented past sanctions. In addition, the US may not act against Chinese purchases of Russian oil, particularly after their recent agreement to ease trade tensions.
