OPEC+ eyes oil output increases from April

OPEC+ is signalling a shift back to increasing oil output from April as producers prepare for stronger demand through the summer months, according to multiple officials and industry delegates ahead of a key March meeting. The coalition, led by core producers such as Saudi Arabia and the United Arab Emirates, paused monthly output rises for the first quarter amid concerns over supply gluts, but growing market confidence and geopolitical tensions appear to have reinvigorated support for boosting production.

The potential restart of monthly production increments follows a significant pause after OPEC+ had added about 2.9 million barrels per day of supply from April to December last year, accounting for roughly 3 per cent of global demand. This interim halt, agreed by members including Saudi Arabia, Russia, Kuwait, Iraq, Algeria, Oman and Kazakhstan, reflected a strategy to balance inventories as consumption typically softens in the early months of each year.

Oil markets are now contending with contrasting signals. On one hand, prices for Brent crude have held near US $68 per barrel, underpinned in part by geopolitical risks such as heightened tensions between the United States and Iran, which have supported a risk premium in crude valuations. On the other, the International Energy Agency has revised its 2026 oil demand growth downward, estimating an increase of about 850,000 bpd—less than previously projected—suggesting slower consumption growth.

Proponents of resuming output increases argue that withholding supply for too long could tighten markets excessively and further elevate prices, a situation that could dampen economic growth and fuel inflationary pressures globally. Delegates from some OPEC+ nations told Bloomberg that concerns over a supply glut are overstated, citing tightness in certain market segments because sanctioned barrels from producers like Iran and Russia remain difficult to trade widely.

Saudi Arabia and the UAE, two of the most influential voices within the alliance, are seen as key drivers of the push to restart output rises. Both have indicated that reclaiming market share lost to non-OPEC producers, such as U. S. shale operators, is a priority, even as constraints from sanctions on other members temper overall supply growth.

Russia, while broadly supportive of aligning with broader OPEC+ policy, appears more cautious. Officials in Moscow have emphasised that any decision will weigh demand projections and market conditions, noting expectations of modestly higher consumption starting around April or May. Russian production has also faced downward pressure of late due to Western sanctions, which have complicated sales and logistical channels for key producers.

Kazakhstan, another significant contributor to the alliance’s supply, reported setbacks in output, which have helped blunt the impact of the output pause on global crude volumes. Meanwhile, Venezuela and Iran continue to grapple with obstacles to scaling production amid sanctions, further complicating the supply picture.

OPEC itself forecasts a slight drop in demand for its crude in the second quarter, yet maintains a positive outlook for overall 2026 consumption, projecting growth of about 1.38 million bpd. This forecast contrasts with the IEA’s more cautious view and highlights the divergent interpretations of global oil fundamentals among major energy institutions.

Market reaction to reports of the potential resumption of output increases has been mixed. Although concerns about a return to higher production have added pressure on oil prices at times, other factors such as softer inflation data from the United States have helped sustain modest gains in crude benchmarks. Commentators note that inflation dynamics can influence demand expectations, as lower consumer price pressures may support economic growth and, in turn, energy consumption.

Technical traders have underscored the balance between geopolitical risk premiums and fundamental supply-demand dynamics, with some suggesting that oil inventories remain below long-term averages. This situation has contributed to a degree of resilience in markets, even as output discussions evolve.