OPEC+ Production Pause: New Developments in the Oil Market

Expectations Before the OPEC+ Meeting

OPEC+, led by significant oil-producing countries including Saudi Arabia and Russia, will review its decision to maintain production cuts in a monthly video conference scheduled for January 4. After a rapid increase in production at the beginning of this year, the halt in new supply increases is on the agenda for the first quarter.

Value Loss in the Oil Market

Crude oil futures have lost 17% of their value this year and are on track for the largest annual decline since the 2020 pandemic. The increasing supplies from OPEC+ and other producers, along with a slowdown in global demand, are among the main factors affecting this situation. The International Energy Agency predicts a record surplus for the next year, but the OPEC secretariat points to a limited surplus.

Geopolitical Uncertainties and Their Effects

The last meeting of OPEC takes place in light of the increasing geopolitical uncertainties in global oil markets. OPEC member Venezuela is facing significant challenges due to the U.S. administration's tracking and blockade of oil-carrying tankers. Additionally, during this process, Kazakhstan has also been affected, with Russian oil infrastructure being targeted.

Saudi Arabia and UAE Relations

The relationship between group leader Saudi Arabia and its neighbor United Arab Emirates has weakened due to the war in Yemen. Saudi Arabia and its allies had decided to resume the restricted supplies that had been in place since April 2023, but this process has since been halted.