OPEC+ sticks to its original plan to increase production, and oil prices return to the 84 mark

On Tuesday (November 2), oil prices continued to rise slightly and once again stood at the 84 mark, continuing the trend of Monday and only one step away from the seven-year high. The major OPEC+ member states still refuse to further increase production. The survey shows that the increase in oil production in October was less than expected, which made oil supply even tighter and oil prices may rise further.


ThinkMarkets market analyst Fawad Razaqzada pointed out in the report that despite the severe power shortage in Europe, and India and other oil importing countries have repeatedly called for OPEC+ to increase oil production, OPEC+ has so far refused to take action.

OPEC+ may follow the current agreement and increase production by 400,000 barrels per day, or may decide to further increase production. Razaqzada believes that OPEC+ may choose to increase production by 800,000 barrels per day this time to reduce the immediate risk of any supply shortage and ease price pressures, but the next meeting will not increase production at all. If there is a decision to deviate from the current policy, it will lead to drastic fluctuations in oil prices.

In the face of the US government’s call for increased production, OPEC+ has turned a deaf ear to it. So far, it has adhered to the original production increase plan of 400,000 barrels per day per month, but it has been difficult for member states to achieve this goal. OPEC+ is scheduled to hold a meeting on Thursday.

Warren Patterson, Head of Commodity Strategy at ING, said in a report: We expect to hear more calls from key consumer countries to increase production in the rest of the week. For now, OPEC+ seems to be trying to resist more radical relaxation of production restrictions. And will stick to the agreement to increase production by 400,000 barrels per day per month.

According to a survey released on Monday, OPEC’s oil production increase in October was lower than the scale planned in the OPEC+ agreement, and the involuntary shutdown of some smaller oil-producing countries offset the impact of increased supplies from Saudi Arabia and Iraq.

The survey found that OPEC’s October output was 27.5 million barrels per day, an increase of 190,000 barrels per day from the previous month, but lower than the 244,000 barrels per day planned in the supply agreement.

At the same time, if Iran returns to the nuclear agreement negotiations this month, it may make OPEC+ members more reluctant to further increase production, because Iran’s export volume may increase.

Rystad Energy senior oil market analyst Louise Dickson said that the market currently ignores some bearish developments, such as China's decision to release national reserves of petroleum products, and the general deterioration of new crown cases in Eastern Europe.

The US President himself hopes to increase production to ease the tight oil supply environment. It is not expected to receive a response from OPEC+ oil-producing countries, because the two major policy promoters of OPEC+, Saudi Arabia and Russia, have said that they hope to wait for the short-term market supply tightness to end.

Dickson said that instead of increasing supply, OPEC+ may prefer to fall behind the demand curve, rather than risk jumping forward and igniting the upper body.