OPEC+ Cuts Production, but Concerns Over Supply Excess Persist
In October, OPEC+ reduced its production by 73,000 bpd, signaling a moderation after months of increases due to the risk of an oil supply surplus in 2026. However, this decision came amidst a backdrop of rising global supply concerns.
Market Performance in the Past Week
Oil prices ended the week with significant declines, recording their worst week since early August. This downturn was primarily due to increased supply from Iraq and the potential for a peace agreement between Russia and Ukraine.
- Brent crude oil in London fell 0.26% to $61.12 per barrel.
- West Texas Intermediate (WTI) in New York dropped 0.28% to $57.44 per barrel.
- Mexico’s export mix closed at $53.76 per barrel, a 0.20% decrease.
These results led to substantial weekly declines for benchmark references. Brent retreated 4.13%, WTI fell 4.39%, and the Mexican mix dropped 4.66%, marking their worst week since August 8.
Year-to-date, Brent is down 18.1%, WTI has decreased by 18.2%, and the Mexican mix has lost 18.8%.
Factors Influencing Oil Prices
Analysts from Monex Casa de Bolsa highlighted two primary factors affecting oil prices: increased supply and OPEC+ production cuts.
- Iraq restored production at the West Qurna 2 oil field, one of the world’s largest, after fixing a pipeline leak. This reactivation eliminated part of the premium previously incorporated into the market due to the risk of prolonged disruption, as this field contributes approximately 460,000 barrels per day (0.5% of global supply).
- Investors closely monitored the slow progress in peace negotiations between Ukraine and Russia.
Gabriela Siller, director of Analysis at Banco Base, noted that oil prices fell last week despite the OPEC improving its demand outlook for 2026, citing solid consumption in China, India, and the Middle East.
- The International Energy Agency reduced its global crude oil supply surplus projection to 3.89 million barrels.
- Ongoing attacks by Ukraine on Russia’s oil industry raised concerns about global crude supply.
Siller emphasized that the market remains cautious, not believing that the aforementioned factors are sufficient to alleviate fears about oversupply at year-end and in 2026.
Mixed Performance Among Oil Companies
Stocks of oil companies listed on the stock exchange had a mixed performance during the week.
- PetroChina, China’s largest oil and gas company, saw a 3.74% decline to 9.53 yuan.
- BP fell 3% to 4.39 British pounds on the London Stock Exchange.
- Shell dropped 2.63% to 3.07 British pounds in London.
- Repsol’s shares fell 2.76% to 15.83 euros on the Spanish stock market (IBEX 35).
- Saudi Aramco, the national oil company of Saudi Arabia, decreased by 2.17%.
- TotalEnergies, the French company, fell 1.44%.
- Equinor, the Norwegian company, lost 1.23%.
On Wall Street, ConocoPhillips led gains with a 1.97% increase to $95.54 per unit, followed by Exxon Mobil with a 1.96% rise to $118.82 per unit. Chevron shares, however, slightly decreased by 0.01% to $150 per unit.
Oversupply Concerns for 2026
Analysts agree that the outlook for the oil market in 2026 suggests a scenario of oversupply due to limited demand growth, justifying OPEC+’s decision to pause production increases in the first half of the following year.
Under these conditions of weak demand and increased supply, Monex estimates that WTI will trade between $55 and $64 per barrel in the first half of 2026, assuming no global supply disruptions linked to geopolitical tensions.
