OPEC+ producers hold October quotas steady

OPEC+ producers have agreed to keep their October oil production quotas unchanged, resisting pressure for another supply adjustment as war-related disruptions continue to remove millions of barrels a day from Middle Eastern output.

Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman decided at a virtual meeting on Sunday to maintain September’s required production levels through October, OPEC said. The seven countries also reaffirmed their commitment to full compliance with the wider OPEC+ agreement and said they would continue monthly reviews of market conditions.

The decision leaves the group’s near-term production framework intact after it completed another step in unwinding voluntary cuts in September. The producers had agreed in August to raise September output by 188,000 barrels a day, part of the gradual return of supply withheld under voluntary reductions announced in 2023.

OPEC+ offered no policy guidance beyond October. Its next meeting is scheduled for October 4, while attention is increasingly shifting towards negotiations over 2027 production baselines, a potentially difficult process because future quotas depend on assessments of individual members’ sustainable production capacity.

The quota review is expected to become the group’s central policy issue over the coming months. Members are being assessed on production capacity, a process intended to shape 2027 baselines and reduce disputes over allocations. The exercise matters because several producers have argued that existing quotas no longer reflect investment, operational capacity or the constraints imposed by conflict and infrastructure this year.

The unchanged October plan comes despite severe disruption across the Gulf. The International Energy Agency estimated in August that 8.3 million barrels a day of Gulf oil production remained shut in during July compared with pre-war levels, even after regional output recovered by 2.5 million barrels a day during the month.

The IEA said Gulf production reached 23.9 million barrels a day in July, while regional exports fell by 2.1 million barrels a day to 15 million as the Strait of Hormuz was effectively closed again and attacks hit oil infrastructure and tankers. It projected global oil supply would decline by an average 4.3 million barrels a day in 2026.

Shipping conditions have deteriorated further. Commodity-vessel traffic through Hormuz averaged about 10 ships a day over the latest 10-day period, the lowest level since May, after renewed US-Iran attacks involving tankers and naval assets. The strait remains the principal export route for several Gulf producers and one of the world’s most important energy corridors.

Oil prices reflected the renewed supply risk on Monday. Brent crude traded near $97 a barrel and West Texas Intermediate above $92, close to six-week highs, as markets assessed further attacks, threats to shipping and damage to energy infrastructure.

Iran has also said it plans to declare a new restricted zone in parts of the Gulf and issue revised shipping corridors through Hormuz. Tehran has restricted traffic through the waterway during the conflict, complicating exports from producers that rely heavily on Gulf terminals.

The physical disruption has limited the extent to which higher OPEC+ targets can translate into additional barrels reaching consumers. Some members have been unable to produce or export at their assigned levels because of infrastructure constraints, shipping risks or war-related interruptions, reducing the practical significance of paper quota increases.

Iraq has nevertheless managed to raise exports as some tanker access improved. Its crude shipments increased to about 2.34 million barrels a day in August from roughly 1.35 million in July, although volumes remained below pre-war levels exceeding 3.3 million barrels a day.

The broader market remains unusually tight. The IEA said observed global oil inventories fell by 69 million barrels in July and stood almost 410 million barrels below levels at the start of the war. Refinery throughput was also nearly 5 million barrels a day lower than a year earlier, contributing to tight supplies of diesel, jet fuel and other refined products.