OPEC+ Production Halt: New Developments in the Oil Market

Expectations Before the OPEC+ Meeting

OPEC+, led by major oil-producing countries including Saudi Arabia and Russia, will review its decision to adhere to production cuts in a monthly video conference scheduled for January 4. Following the production increase accepted in November and rapidly implemented at the beginning of this year, halting new supply increases in the first quarter is on the agenda.

Value Loss in the Oil Market

Crude oil futures have experienced a 17% depreciation this year and are heading toward the largest annual decline since the pandemic period in 2020. The increasing supply from OPEC+ and other producers, alongside a slowdown in global demand, are among the key factors affecting this situation. The International Energy Agency forecasts a record supply surplus for next year, while the OPEC secretariat signals a limited surplus.

Geopolitical Uncertainties and Their Effects

The last meeting of OPEC takes place in light of rising geopolitical uncertainties in global oil markets. OPEC member Venezuela is facing significant challenges due to the US administration tracking and blocking oil-carrying tankers. Additionally, as Russia's oil infrastructure comes under target, Kazakhstan is also affected.

Saudi Arabia and UAE Relations

The relations between group leader Saudi Arabia and its neighbor United Arab Emirates have weakened due to the war in Yemen. Saudi Arabia and its allies decided to reinstate the production that had been constrained since April 2023; however, this process was subsequently halted.