OPEC+ is once again playing it cautiously. For the second consecutive month, the world's largest oil producer group only increased supply by 137,000 barrels per day—a figure significantly lower than market expectations. Although Saudi Arabia and Russia initially disagreed, this decision indicates they are still trying to maintain a balance between maintaining prices and regaining market share.

But the move comes at a less than ideal time. The global oil market is becoming oversupplied, with oil reserves continuing to grow and global demand predicted to slow. According to the International Energy Agency (IEA), a large surplus will emerge by 2026, with supply exceeding demand by millions of barrels per day. In fact, Brent prices plunged to a four-month low before rebounding slightly to around $65.

Meanwhile, the differing stances between Russia and Saudi Arabia are under scrutiny. Russia wants to keep prices high, while Saudi Arabia is aggressively seeking to regain market share lost to producers like the US, Brazil, and Canada. But in reality, only Saudi Arabia has significant spare production capacity - most other OPEC+ countries are hampered by infrastructure and sanctions.

With global oil reserves continuing to swell, the market is interpreting this signal as a sign of "extreme caution" from OPEC+. Oil prices may not be in freefall yet, but they are trending downward. Barring major geopolitical disruptions or demand shocks, analysts predict prices could break below $60 in the near future. At the time of writing, Brent prices were around $64.34/barrel and WTI $61/barrel. (azf)

Source: Newsmaker.id