Oil fell in price amid signs of OPEC+ readiness to continue production increases

The cost of oil fell 3% on Monday amid OPEC+ plans to continue increasing production in November and the resumption of exports from Iraqi Kurdistan via Turkey, Reuters writes.

Brent crude futures fell 3.5%, below $67.7 per barrel. Futures for U.S. West Texas Intermediate crude Mark showed the sharpest decline since June, falling 3.5% to $63.5.

Prices have pulled back from the two-month highs reached last week. Before the weekend, Brent futures rose above $70 a barrel for the first time since early August amid Ukrainian drone strikes on Russian energy infrastructure that disrupted refinery operations and oil supplies of one of the world's largest exporters.

One of the reasons is reports about OPEC+ plans to further increase oil production. At an online meeting on October 5, the cartel is preparing to agree to increase production in November by at least 137,000 bpd, sources told Reuters on September 28. "As OPEC+ shifts its focus to retaining market share, fundamentals for oil look weaker and [market] fears of oversupply prevail," Claudio Galimberti, chief economist at Rystad Energy, told the agency.

Since April, when the production increase began, OPEC+ has already added over 2.5 million barrels per day, which corresponds to about 2.4% of global consumption. At the same time, analysts note that the actual production growth lags behind the official plans: most cartel members are already working at the limit of their technical capabilities.

"Many producers, with the exception of Saudi Arabia, have effectively reached the limit of their production, so future OPEC+ supply increases will be well below the headline numbers," RBC Capital Markets LLC said in a research note cited by Bloomberg.

The second catalyst for the fall in oil prices was Iraq's announcement of the resumption of Kurdish oil exports to Turkey after a break of more than two years, writes Reuters. The restoration of this channel is expected to eventually return up to 230,000 barrels of crude oil per day to international markets, the agency notes.

OPEC and its allies are sticking to their strategy of rebuilding their global market share despite the International Energy Agency predicting a record supply glut in 2026.

TotalEnergies said in a strategy update on Sept. 29 that it expects a significant surplus in the market in the first quarter of next year, Bloomberg reports. However, starting in 2027, the company estimates that spare production capacity will begin to shrink due to lower investment caused by falling oil prices. From 2028 to 2030, Total predicts, non-OPEC+ supply will decrease while demand will continue to increase.

This article was AI-translated and verified by a human editor