"OPEC+, expected to maintain production cut plan amid oversupply concerns"

Aim to calm oil price declines caused by a global oil supply glut

The Organization of the Petroleum Exporting Countries and allies (OPEC+) is expected to maintain its production cut plan at this weekend's meeting amid signs of a global oil supply glut.

According to Bloomberg on the 30th (local time), sources said major member countries, including Saudi Arabia and Russia, are likely to maintain the November decision to halt the planned production increases for the first quarter of next year at the monthly videoconference on January 4. This is interpreted as being due to the continued decline in oil prices amid a global oil supply glut.

Crude oil futures prices have fallen 17% so far this year. With global oil demand growth slowing and a surge in oil supply from OPEC+ and non-OPEC+ countries, the market is expected to record the largest annual decline since the 2020 pandemic.

Forecasting agencies such as the IEA also expect the largest supply glut on record next year. The OPEC+ Secretariat, which typically issues more optimistic demand forecasts than other agencies, also anticipates a slight supply surplus.

The global oil market is experiencing heightened uncertainty related to geopolitical tensions.

OPEC+ member Venezuela began shutting wells after facing blockade measures by U.S. President Trump. The United States seized and pursued tankers carrying Venezuelan crude. Ukraine attacked Russian oil facilities and tankers, and as a result another OPEC+ member, Kazakhstan, was also affected.

The Yemen civil war has also placed relations between Saudi Arabia and the neighboring United Arab Emirates (UAE) in an openly tense state. Saudi Arabia that day called on the UAE to stop supporting armed groups operating in Yemen.

OPEC+ had cut production through the first quarter of this year since 2023 but has slightly increased production from the second quarter. Despite signs of an oil supply surplus this year, market share gains by non-member countries have led to this trend. Accordingly, OPEC+ member countries such as Saudi Arabia began restoring 2.2 million barrels per day of oil production from April this year.

Contributing reporter Kim Jeong-ah kja@hankyung.com