Background and Relevance
OPEC+, a group consisting of OPEC members and allies like Russia, is responsible for producing nearly half of the world’s crude oil. The group has shifted from production cuts since April, raising quotas by over 2.5 million barrels per day (bpd) to regain market share and respond to pressure from U.S. President Donald Trump to lower oil prices.
The relevance of this news lies in the upcoming meeting on October 5th, where eight OPEC+ countries will decide on November production levels. Understanding their decisions is crucial as they significantly impact global oil supply and, consequently, oil prices.
Upcoming Meeting Details
On October 5th, eight OPEC+ countries will hold an online meeting to determine November’s production levels. This group, which includes OPEC members and allies like Russia, accounts for almost half of the world’s crude oil production.
Oil Price Trends
Oil prices have dropped from over $80 per barrel at the beginning of the year, settling in a narrow range between $60 and $70 per barrel since OPEC started increasing production in April. However, prices reached their highest point since August 1st on Friday, surpassing $70 per barrel due to drone attacks on Russia’s energy infrastructure, disrupting refining and exports from one of the world’s largest oil exporters.
Market Reactions
Antonio Montiel, Director of Analysis at ATFX Education, explained the market’s reaction to rising tensions in strategic oil-exporting regions, which increased the risk premium in futures contracts. Additionally, hopes for a potential trade tariff rollback or adjustment reignited global demand prospects, boosting appetite for oil as an economic growth-sensitive asset.
Production Cuts Overview
OPEC+ initially reduced production by a total of 5.85 million bpd, comprising three components: voluntary cuts of 2.2 million bpd, 1.65 million bpd from eight members, and another 2 million bpd from the entire group.
- By the end of September, the eight producers plan to eliminate one component—2.2 million bpd.
- Starting October, they will remove a second layer of 1.65 million bpd, with an increase of 137,000 bpd.
OPEC+ also approved the United Arab Emirates’ production increase of 300,000 bpd between April and September.
The upcoming November increase, to be discussed on October 5th, will be at least 137,000 bpd—matching October’s increase.
Impact on Oil Companies
Oil companies have benefited from the rise in oil prices, with stocks rising during the previous week.
- Repsol (Spain) led the week with an 8.31% increase.
- ConocoPhillips (USA) followed with a 7.14% rise.
- BP (UK) came in third with a 5.93% gain.
- TotalEnergies (France) saw a 5.2% increase.
- Shell (Netherlands) rose by 4.54%.
- Exxon Mobil (USA) increased by 3.90%, and Chevron (USA) gained 2.53%.
- Saudi Aramco (Saudi Arabia) was the only major oil company to lose ground, with a 1.93% decline.
Key Questions and Answers
- What is OPEC+? OPEC+ is a group consisting of the Organization of the Petroleum Exporting Countries (OPEC) members and allies, including Russia. Together, they produce nearly half of the world’s crude oil.
- Why is the upcoming OPEC+ meeting important? The meeting on October 5th will determine November’s production levels, significantly impacting global oil supply and prices.
- How have oil prices changed recently? Oil prices dropped from over $80 per barrel at the start of the year to a range between $60 and $70 per barrel since April. Prices briefly surpassed $70 per barrel on October 1st due to drone attacks on Russia’s energy infrastructure.
- How have oil companies performed recently? Major oil company stocks generally rose during the previous week, with Repsol (Spain) leading the way and Saudi Aramco (Saudi Arabia) being the only exception.
