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Will OPEC+ back away from raising output?

The US business publication The Wall Street Journal reported, citing anonymous OPEC sources, that disagreements have arisen within OPEC+ over the decision to maintain current oil production quotas at the next ministerial meeting in December. According to these sources, Saudi Arabia and Russia are inclined to take a pause in increasing oil production due to the recent announcement by US President Joe Biden about the release of up to 50 mln bbl of oil from the US Strategic Petroleum Reserves in order to lower domestic gasoline prices. Other OPEC+ countries, primarily the United Arab Emirates, allegedly disagree with this position, considering it necessary to hold the current output quotas steady in December.

This news has not been officially confirmed. However, it should be noted that more than once on the eve of OPEC+ ministerial meetings, Western media, mainly American, highlight disagreements in the alliance, and this information is not always confirmed. The Kremlin commented on this news as follows: Russian President Vladimir Putin is not yet negotiating a change in current oil production parameters approved by OPEC+, with the heads of other states participating in this agreement.

The Biden administration’s decision to release up to 50 mln bbl of oil from its strategic reserve will hardly affect the oil market, since such a volume is negligible in terms of the global market. Therefore, it is unlikely that this particular event will be able to change the plans of OPEC+ to lift oil production in December by 400 kbpd. However, the lifting of US sanctions on Iranian oil ahead of Iran's nuclear talks could exert a powerful negative impact on the oil market. If this happens, the issue of pausing the increase in oil production by OPEC+ countries would most definitely be on the table.

In line with our forecast, the Brent price could fluctuate in the range of $77-82/bbl until the end of November.

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