Oil Prices Hold Steady After OPEC+ Decision

Crude futures traded relatively flat this morning, maintaining yesterday's gains after closing up by more than 80 cents per barrel day-over-day.

On Sunday, OPEC+ agreed to a 137,000-barrel-per-day production increase for November, continuing the monthly output boosts that began in April. According to Reuters, the Group opted for only a modest rise due to concerns about a potential global glut as non-OPEC supply rises and fuel demand growth slows. Several OPEC+ sources cited fears of oversupply, noting that benchmark Brent prices fell 8% to below $65 per barrel last week after reports suggested larger increases were under consideration. Brent has traded between $60 and $70 per barrel since April, down from $82 at the start of 2025.

The strategy remains focused on market fundamentals rather than price targets, though sources familiar with negotiations said Saudi Arabia appears to be prioritizing market share. Since April, OPEC+'s planned output increases, including November's adjustment, total more than 2.7 million barrels per day, or about 2.5% of global demand. So far, the group has achieved roughly 75% of that goal as many producers reach capacity limits.

Recent data indicate that stockpiling by China and summer demand absorbed much of OPEC+'s additional output, but analysts expect a potential surplus in the coming months as seasonal demand slows and production from the United States, Brazil, and Guyana continues to rise. The International Energy Agency projects a 3.3 million-barrel-per-day surplus in 2026, while OPEC's latest forecast implies a 700,000-barrel-per-day deficit if current production levels are maintained.

JP Morgan reported that global oil and liquids inventories, including crude stored on water, rose every week in September, adding 123 million barrels during the month and 269 million barrels year-to-date. China accounted for more than a third of that increase.

Meanwhile, exports from Russia, Saudi Arabia, Iraq, the UAE, Kuwait, and Oman jumped by 1.3 million barrels per day in September versus August, according to Kpler data.

Amid these supply trends, Russia's seaborne crude shipments rose to 3.57 million barrels per day over the past month, reaching a 16-month high. The increase occurred alongside a surge in Ukrainian drone attacks on Russian refineries, which diverted supplies from domestic processing to export terminals. The total oil in transit now stands at 1.2 billion barrels, the highest since at least 2016.

In one of the most significant incidents, the Kirishi oil refinery halted operations at its most productive unit after a drone attack and fire on October 4th. The unit, with a capacity of 160,000 barrels per day, represents about 40% of the plant's total processing capacity. The refinery processed 17.5 million tons of crude in 2024, or about 6.6% of Russia's total refining volume, producing 2 million tons of gasoline, 7.1 million tons of diesel, 6.1 million tons of fuel oil, and 600,000 tons of bitumen.

In response to global supply uncertainty, China's state oil companies plan to add at least 169 million barrels of storage across 11 sites in 2025 and 2026, with 37 million barrels of that capacity already completed this year. China accelerated stockpiling following Russia's invasion of Ukraine to reduce vulnerability to import disruptions.

Meanwhile, Saudi Arabia kept the price for its main crude grade to Asia unchanged on Monday, following a decline in Middle Eastern oil prices last week as supplies increased.