The Organization of the Petroleum Exporting Countries (OPEC) and its cooperating producers (OPEC+) led by Saudi Arabia and Russia intend to maintain their oil production quotas unchanged for December. This decision comes as many of the group's major producers, including Iraq, Kuwait, Kazakhstan, Algeria, and Oman, have kept their production steady following a gradual reduction of 1.65 million barrels per day that ended in September 2023.
Impact of Wars on Oil Production
In the past eight months, the set quotas have largely been only on paper, as regional conflicts in the Middle East, particularly in the Strait of Hormuz, have disrupted crude oil supply. This situation has pressured Gulf producers to reduce their production earlier this spring. However, since August and September, with increased oil flow from the Strait of Hormuz, many producers have begun to ramp up their production, nearing pre-war levels.
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Looking Ahead and New Planning
Despite the increase in oil exports from the Strait of Hormuz over the past two months, most Gulf producers in OPEC are still producing below their quotas. Meanwhile, OPEC is considering another layer of production cuts for most of its members until the end of 2026. Attention is turning to the establishment of a production baseline for 2027, which will determine how member countries' quotas are calculated.
The group of OPEC producers, especially under the leadership of Saudi Arabia and Russia, seems to be focusing its discussions on the 2027 quotas. This group intends to review the quotas soon and establish the necessary baselines for any production cuts. Given that wars in Iran and Ukraine have had significant impacts on exports from these countries, producers must plan more carefully for the future.
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