The recent decision to pause production increases by the Organisation of the Petroleum Exporting Countries and allies highlighted the complex situation the cartel finds itself in.
OPEC’s desire to regain market share has to take a backseat as the cartel and its allies navigate a tricky phase, where stabilising oil prices has become more important.
Oil prices have slipped in the last few months and have languished around the $60 per barrel mark, with the West Texas Intermediate crude oil falling below that level.
OPEC+ officially affirmed its current strategy during its Sunday meeting, as anticipated.
Key to this decision was the confirmation from the eight member countries that had implemented voluntary production cuts that they would not raise production further throughout the first quarter of 2026.
The Joint Ministerial Monitoring Committee (JMMC) is scheduled to continue its meetings on a bi-monthly basis, with the option to hold extra sessions as needed.
Furthermore, the OPEC Secretariat is developing a new mechanism to establish member countries’ maximum production capacities. This mechanism will then be used as the foundation for setting production quotas in 2027.
Output quotas
The meeting’s most significant result is the postponement of a resolution on the divisive matter of individual production quotas.
Although originally scheduled for 2027, the reassessment and decision on each country’s production capacity were brought forward due to internal pressures and had been a central expectation for this meeting.
“This has postponed a potential controversial issue for the time being,” Barbara Lambrecht, commodity analyst at Commerzbank AG, said in a report.
Discrepancies have emerged among member countries: some, such as Iraq and Kazakhstan, have the potential to increase production by expanding capacity, while others appear to have already reached their capacity limits.
Lambrecht said:
Some are no longer even able to meet their production quotas.
Setting production quotas has always been a highly contentious issue within OPEC and its allies, as every member strives for a larger share to safeguard its revenue.
Historical events underscore this point: for instance, Angola withdrew from OPEC in 2023 following a quota disagreement, mirroring Ecuador’s exit in 2019 for the same reasons.
“This latest postponement suggests that internal cohesion remains fragile and that OPEC+ is wary of reopening wounds at such a precarious moment,” Jorge Leon, head of geopolitical analysis at Rystad Energy, said in an emailed commentary.
“This could certainly lead to disagreement among members, with countries keen to secure higher baselines,” said Warren Patterson, head of commodities strategy at ING Group.
Geopolitical factors
OPEC’s recent decision on Sunday was also shaped by geopolitical factors around the world.
Russia and Ukraine are locked in delicate peace negotiations that could reshape the oil markets, while tensions between the US and Venezuela, one of the coalition’s politically sensitive producers, have escalated sharply.
“These overlapping risks complicate any strategy that relies on predictable supply,” Leon said.
For OPEC+, the safest course was to step back, acknowledge the fog of geopolitical risk, and avoid moves that could unintentionally amplify volatility.
Trump is increasing pressure on Venezuelan President Maduro, with the measures intended to combat drug trafficking.
Oil production has seen minimal impact so far. In October, it stood at 950,000 barrels per day, only 50,000 barrels shy of the five-and-a-half-year peak reached in September, according to Commerzbank.
Analysis firm Kpler’s new export data indicates that the increase in US presence in the Caribbean did not likely affect November’s export activity.
Exports for November reached 590,000 barrels per day, a rise of approximately 160,000 barrels compared to October.
“It is therefore not surprising that the tensions have not had a significant impact on oil prices so far,” Lambrecht said.
Fragile cohesion
Last but not least is the question of whether OPEC members and their allies are on the same page about production levels going forward.
OPEC+ is signalling a desire for stability, recognising the current market’s fragile nature.
The group understands that any perceived misstep, even a minor one, could lead to disproportionate price volatility.
Therefore, instead of committing to a new production strategy, OPEC+ is prioritising flexibility.
This preserves their ability to respond rapidly to any deterioration in market conditions or unexpected supply disruptions caused by geopolitical events.
The global liquid market is expected to face a substantial oversupply in the coming year.
Rystad Energy forecasts a surplus of 3.75 million barrels per day in 2026, which would represent one of the largest projected gluts in recent years.
“Against this backdrop, any additional barrels from OPEC+ would risk deepening the price decline that is already visible across the forward curves,” Leon said.
For producers that are heavily reliant on oil revenues, holding back supply now is becoming less of an option and more of a necessity.
OPEC+ faces a precarious situation, navigating an anticipated significant surplus in 2026 coupled with unusually elevated geopolitical tensions.
OPEC+ is currently attempting to manage an oil market that is trending toward oversupply, even as it must simultaneously prepare for unforeseen geopolitical disruptions.
“The result is a strategy rooted in caution, one that leaves room for rapid adjustment but also highlights the complex, fragile nature of the alliance’s current position,” Leon added.
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