Oil Surplus Outlook, Uncertain Geopolitics Led OPEC+ to Pause Hikes: Rystad

A looming global crude oil surplus, uncertainties over U.S. policies toward Venezuela and the continuing war between Ukraine and Russia led OPEC and allied producers to pause further production increases in the first quarter of 2026, analyst Rystad Energy said Sunday.

In a Sunday policy statement, the eight OPEC+ producers, which include Russia, reaffirmed the group’s early November decision to maintain current production levels in the first quarter. The group earlier agreed to raise output by 137,000 b/d in December.

Rystad projected oil supply will exceed demand next year by 3.75 million b/d.

“The message from [OPEC+] is clear: stability outweighs ambition at a time when the market outlook is deteriorating rapidly,” Jorge Leon, Rystad’s head of geopolitical analysis, said.

Rystad said the producer group’s decision was due in part to ongoing peace talks between Russia and Ukraine and sharp escalation of tensions between the U.S. and Venezuela. Venezuela, which has one of the largest oil reserves in the world, is an OPEC member.

The analyst said any additional OPEC+ barrels would risk sending oil prices lower, given weakness across forward crude oil futures.

OPEC+ in November 2023 began to unwind 2.2 million b/d in production cuts the group had adopted in response to demand losses tied to the Covid-19 pandemic.

The organization on Sunday also said it would develop a mechanism to assess “maximum sustainable production capacity” of its members.

Rystad said the group’s call to assess output capacities rather than to impose individual output quotas indicates fragile cohesion among the group, creating uncertainty whether some members will unilaterally choose to increase output in the future.

–Reporting by Frank Tang, ftang@opisnet.com