OPEC+ producers confirmed on Sunday their plan to raise collective output by 137,000 barrels per day (kbd) in November, following a brief nine-minute meeting with no objections, according to Société Générale FX analysts. The decision was backed by Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman.
Oil rallies as OPEC+ signals limited spare capacity
Saudi Arabia and Russia will each account for the largest individual increases, adding 41kbd. Following the announcement, both WTI and Brent crude rallied by about 1.45% in early electronic trading, extending to roughly 1.8% at the time of writing. Analysts noted that the market reaction suggests traders had priced in expectations of a larger production hike, with sentiment instead shifting toward concerns about limited spare capacity. Société Générale observed that actual physical output continues to trail well below announced targets, running at roughly half of the cartel’s stated volumes.
Fundamentals and currency impact
In its press statement, OPEC+ cited “current healthy market fundamentals,” including low global oil inventories, as justification for the modest increase. Société Générale also pointed out that the recent weakness of the US Dollar has reduced oil producers’ revenues when converted into local currencies—though this impact is muted for the Saudi Riyal, which remains pegged to the USD.
Outlook: tighter long-term supply expected
The next OPEC+ ministerial meeting is scheduled for November 2. Société Générale said the group’s latest decision aligns with its September Outlook: Fundamentals to the Fore, maintaining its base case for a tightening market. The bank expects the forward curve to transition into full contango and evolve into a steep structure, reflecting concerns that limited spare capacity could constrain long-term supply and leave the market without adequate buffers.
