Opec+ keeps December oil output targets steady ahead of tougher call for 2027

Opec+ oil-producing nations maintained December production targets unchanged on Sunday, signaling that further adjustments will likely await until next year. This decision came following an online gathering involving seven core members - Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman - as reported by Opec in a statement.

Notably, Gulf members have been increasing exports despite the ongoing Iran war disrupting supplies; however, most still fall short of their targets. Opec+ encompasses the Organization of the Petroleum Exporting Countries and its allies, including Russia. The group presently comprises seven members, plus the UAE until its May departure from Opec, for monthly output decisions.

The statement highlighted by Jorge Leon, an analyst at Rystad, suggests that while Sunday's decision was relatively simple, the real challenge lies in the upcoming Nov 29 ministerial meeting where Opec+ will determine the 2027 production framework. Analyst Leon warns of potential excess supply in 2027 if Gulf flows return to normal, citing International Energy Agency and other forecasts.

He emphasizes the extreme difficulty in Opec+'s decision-making for 2027, citing the uncertainty surrounding the US-Iran war, the pace of recovery through the Strait of Hormuz, and the surplus that could emerge once disrupted barrels return.

A critical point to note is that the seven members have been gradually increasing output targets throughout 2026 and completed the phased rollback of a 1.65 million-barrel-per-day supply cut in September, which was initially agreed upon in 2023. They maintained the targets steady for October and November in previous meetings. Opec+ still retains an additional layer of production cuts of approximately 2 million barrels per day, covering almost all members through the end of 2026.

The group must conduct a review of its members' production capacity during the fourth quarter before setting the 2027 baselines that will determine future quotas and guide plans to ease those cuts. The Iran war has disrupted capacity expansion projects across the Middle East, leading to uncertainty in future production potential estimates.