Vienna (AFP) – OPEC nations and oil-producing allies reaffirmed Sunday plans to keep current oil output levels unchanged until March, and agreed on a mechanism to assess members’ maximum production capacity, without giving any details. The announcements were made after ministers of the Organization of the Petroleum Exporting Countries and allied nations (OPEC+) held a string of virtual meetings, including the alliance’s biannual ministerial meeting.
The meetings came as uncertainty remained over how oil prices will develop in the near future, with traders looking for indications of progress in ongoing negotiations on resolving the conflict in Ukraine, which could lead to the return of Russian crude to markets. Citing expected lower seasonal demand, OPEC+ countries said they would stick to a planned pause on oil output hikes “in January, February, and March 2026” following a small production increase in December, according to a statement.
The OPEC+ alliance also said it approved a mechanism to assess members’ maximum production capacity “to be used as reference for the 2027 production baselines.” According to Kpler analyst Homayoun Falakshahi, some members have argued that “current allocations no longer reflect investment levels, geology, or technical potential” of their oil production. “The group only managed to agree on a mechanism to assess production capacities next year, a clear indication of unresolved tensions,” Jorge Leon of Rystad Energy told AFP.
Since April, eight key OPEC+ members have boosted production in an effort to regain market share amid strong competition from producers outside the group, such as the United States, Canada, and Guyana. But early November they agreed to a pause in further hikes amid fears of a supply glut. Geopolitical uncertainties, including ongoing negotiations on Russia’s war in Ukraine, have also put pressure on oil prices as well as producers.
“Russia and Ukraine are locked in delicate peace negotiations that could reshape the oil markets, while tensions between the US and Venezuela have escalated sharply,” said Leon. An easing of tensions in the war between Russia and Ukraine would reduce the geopolitical risk premium that is driving up crude prices, while a deadlock in the negotiations would shift the focus of producers back to US sanctions against Russian oil giants Lukoil and Rosneft. The next OPEC+ ministerial meeting is set for June 7, 2026.
© 2024 AFP
